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Full text of "Report on the programs authorized under the Economic opportunity act of 1964, as amended"

N, -r f i C/ V 



J-- ^ 



95th Congress \ 
2d Session / 



COMKITTEE PBINT 



REPORT ON THE PROGRAMS AUTHORIZED 

UNDER THE ECONOMIC OPPORTUNITY 

ACT OF 1964, AS AMENDED 



PREPARED FOR THE 

SUBCOMMITTEE ON EMPLOYMENT, POVERTY, AND 
MIGRATORY LABOR 

OF THE 

COMMITTEE ON HUMAN RESOURCES 
UNITED STATES SENATE 



^^,///./v»^^ 




J or : 

MAY 1978 \^ J^^ 

^^ 

-^ it 












'•^^^yyy//^' 



Printed for the use of the Ck)mmittee 
on Human Resources 



25-371 o 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1978 



COMMITTEE ON HUMAN RESOURCES 

HARRISON A. WILLIAMS, JR., New Jersey, Chairman 
JENNINGS RANDOLPH, West Virginia JACOB K. JAVITS, New York 

CLAIBORNE PELL, Rhode Island RICHARD S. 8CHWEIKER, Pennsylvania 

EDWARD M. KENNEDY, Massachtisetts ROBERT T. STAFFORD, Vermont 

OAYLORD NELSON, Wisconsin ORRIN O. HATCH, Utah 

THOMAS F. EAOLETON, Missouri JOHN H. CHAFEE, Rhode Island 

ALAN C RANSTON, California 8. I. HAYAKAWA, California 

WILLIAM D. HATHAWAY, Maine 
DONALD W. RIEGLE, Jr., Michigan 

Stephen J. Paradise, General Coumd and Staff Director 

Marjorie M. Whittaker, Chief Clerk 

Don a. Zimmerman, Minority Couruel 

Gregory Fusco, Minority Staff Director 



Subcommittee on Employment, Poverty, and Migratory Labor 
GAYLORD NELSON, Wisconsin, Chairman 
ALAN C RANSTON, California JACOB K. JAVITS, New York 

WILLIAM D. HATHAWAY, Maine ORRIN G. HATCH, Utah 

DONALD W. RIEGLe, Jr.^ Nfichigan JOHN H. CHAFEE, Rhode Island 

HARRISON A. WILLIAMS, Jr., New Jersey 
(ex (^cio) > 

Scott K. Ginsburg, Counsel 
James J. O'Connell, Mirwrity 



(n) 



V 



'»>Xx. 



CONTENTS 



Page 

Letter of transmittal v 

Foreword vn 

Preface ix 

Part I : History of the development of the anti-poverty programs and status 
report on programs presently authorized by the Economic Opportunity 

Act of 1964, as amended 1 

History of the development of the anti-poverty programs 1 

Programs of the Community Services Administration 4 

1. Community Action 4 

2. Economic Development 5 

3. Energy and Weatherization 6 

4. Senior Opportunities and Services 6 

5. Community Food and Nutrition 6 

6. State Economic Opportunity Offices 7 

Programs of the Department of Health, Education, and Welfare 8 

1. Headstart Program 8 

2. Follow Through Program 9 

3. Native American Program 10 

Part II: Summary of oversight and investigative reports concerning pro- 
grams authorized by the EOA 11 

Organization and management 12 

1. Findings and recommendations 13 

2. Agency response to date 14 

3. Additional staff recommendations 15 

Problems resulting from statutory requirements and funding cycles.- 16 

Fiscal, program and grantee administration 17 

1. Findings and recommendations 17 

2. Agency response to date 19 

3. Additional staff recommendations 20 

Community economic development 22 

1. Findings and recommendations 22 

2. Agency response to date 23 

3. Additional staff recommendations 24 

Advocacy 25 

1. Findings and recommendations 25 

2. Agency response to date 25 

3. Additional staff recommendations 26 

CS A-Supported Anti-pro verty Associations 26 

A. Findings and recommendations 27 

NCAAEDA 28 

NACD 29 

NCATF 29 

NCCA 30 

CAT 30 

1. Agency response to date 30 

2. Additional staff recommendations 31 

Part III: The Headstart allocation formula 32 

Funding 32 

1. Step one 33 

2. Step two 33 

3. Step three 33 

(m) 



IV 

APPENDIX 

Appendix A. Report to the Senate Subcommittee on Employment, Poverty, 

and Migratory Labor from Graciela (Grace) Olivarez, Director, Com- p*K€ 
munity Services Administration 34 

Appendix B. The Economic Opportunity Act of 1964, as amended 58 

Appendix C. Legislation pending before the subcommittee which would 

amend the Economic Opportunity Act, S. 2090, S. 2081, and S. 1919__ 155 

Appendix D. Communication between the agencies and the Congress 

regarding legislation and oversight 168 

Appendix E. Organizational diagrams of the Community Services Adminis- 
tration; the HEW Administration for Children, Youth and Families; 
and the HEW Administration for Native Americans 239 

Appendix F. Chronology of OEO/CSA Directors and their terms of service. 249 

Appendix G. CSA standards of effectiveness and program performance 

instructions 251 

Appendix H. The Headstart funding formula 263 



LETTER OF TRANSMITTAL 



EOWAUD M. KE.NNCDV. UASS. ROBCH 

GAYLORD NrLSOM. WIS. OMlllN C. MATCH. VTAH 



^Cwicb ^ictiesi ^enale 

COMMITTEE ON HUMAN RESOURCES 
r«.WH.TT««.c»,«.c«« WASHINGTON. DC 20510 

May 1, 1978 



Honorable Harrison A. Williams, Jr. 

Chairman 

Senate Committee on Human Resources 

Washington, D. C. 20510 

Dear Mr. Chairman: 

During the 2nd Session of the 95th Congress, the Subcommittee on 
Enployment, Poverty, and Migratory Labor will be involved in an extensive 
examination and re-evaluation of the programs conducted under the 
Economic Opportunity Act of 1964, as amended, vdth a goal of renewal 
of the authorization for programs due to expire at the end of the current 
fiscal year. 

Because of the widespread interest in these various programs and 
the extensive work to be conducted by the Subcommittee, a staff report on 
the programs authorized under the Economic Opportunity Act has been 
prepared. The report was coirpiled by Mr. Lee J. Foley, Ms. Lori L. Hansen, and 
Mr. Scott K. Ginsburg, all of whom are present or former professional 
staff members with the Subcommittee. The report includes a history of and 
current statios of the programs authorized under the Economic Opportunity 
Act, a summary of the oversight and investigative reports concerning these 
programs, and a review of the reports issued concerning the Headstart- 
funding formula. Nothing in this staff report reflects the views of the 
members of the Subcommittee or the Chairman. 

This staff report and its recoimiendations will be most helpful in 
Committee deliberations. Accordingly, I am enclosing herewith a copy 
of the staff report and ask authorization that a Committee Print be issued. 



Sincerely yours, 



LORD NELSON, Chairman 
5committee on Enployment, Poverty, 
and Migratory Labor 



GN:lhw 
Enclosure 



(V) 



FOREWORD 



The Economic Opportunity Act of 1964 and subsequent amend- 
ments to this statute generated some of this Nation's most successful 
programs to combat the continuing problems of poverty. Such pro- 
grams as community action, weatherization of houses, community 
food and nutrition, Headstart, Follow Through, Senior Opportunities 
and Services, and Legal Services, as well as others, have significantly 
aided in improving the lives of poor people and communities. The 
Community Services Administration, formerly the Office of Economic 
Opportunity, has been the FedeJal agency responsible for administer- 
ing most of these programs. 

Rewarding gains have been made in the ''war against povery'* 
under this agency's program initiatives, despite a tumultuous history 
that included an attempted dismantlement of the poverty agency by 
the Nixon administration in 1973. At the reconmiendation of this com- 
mittee, an independent agency was created in an effort to repair the 
damage to the agency and its programs. Poor administration and co- 
ordination, personnel dissatisfaction, and other such problems had 
seriously undermined the basic operation of the agency. During the 
past 2 years, reports issued by congressional committees and the Gen- 
ei-al Accounting Office have underscored the pressing need to improve 
the administration and management of the Conmiunity Services 
Administration. 

Under the new Director for CSA, Ms. Graciela Olivarez, major 
corrective actions have been undertaken to improve and strengthen 
the interdepartmental coordination and program and fiscal manage- 
ment of the agency. It is clear that these corrective actions must con- 
tinue if the agency is to ejffectively and efficiently combat the multi- 
faceted problems of poverty. 

This report reviews and summarizes the history and current status 
of the programs authorized under the Economic Opportunity Act, 
as well as the recent reports by governmental agencies respecting the 
operation of the Community Services Administration. The views ex- 
pressed are those of the staff of the Subcommittee on Employment, 
Poverty, and Migratory Labor, and are published for the information 
of the committee, the Congress, and other interested citizens. The 
report is a useful aid for determining what further actions must be 
taken to improve the operation of CSA and enable the agency to best 
marshall its resources to eliminate the causes and consequences of 
poverty. 

Harrison A. Williams, Jr., 
Chairman^ Committee on Human Eesources. 

(vn) 



PREFACE 



In the past 2 years, congressional committee reports and reports 
issued by the General Accounting Office have raised concerns about 
the administration and management of the poverty programs by the 
Conmiunity Services Administration (CSA). While former President 
Xixon attempted to dismantle CSA/OEO, not all of the problems 
which have been brought to the Subcommittee's attention can be at- 
tributed to the actions of previous administrations. As a matter of fact, 
these reports have drawn our attention to numerous program failures 
and abuses of Federal funds which have not been aggressively pursued 
by CSA. 

Although CSA has begun to address these problems under the 
guidance of its present Director, Graciela Olivarez, the Subcommittee 
has been seeking answers to questions about the agency's lingering 
organizational and program problems. These past and continuing 
problems must be resolved if CSA is to resume its prominent role 
within the Federal structure as the agency designated to advocate and 
serve the needs of the poor. 

This staff report reviews the programs authorized by the Economic 
Opportunity Act of 1964, as amended. It also provides an overview of 
the reports which have been issued by the General Accounting Office 
and the congressional conmiittees, as well as the current status of the 
various poverty programs. The staff report indicates that while CSA 
now is moving in the right direction, further consideration needs to 
be given as to the future direction of the agency. 

In my judgment, the agency should focus its future efforts and 
resources in three important areas which can help make better use of 
the available resources: 

1. Providing an information source and clearinghouse on identified 
needs and problems of poor people. CSA has a network of nearly 900 
local grantees which serve approximately two-thirds of the Nation's 
poor. Many of these grantees have developed sophisticated mechanisms 
for collection of information about needs and services. In Wisconsin, 
for example, the community action agencies (CAA's) are presently 
demonstrating an innnovative Outreach Management Information 
System and will soon begin to pilot a comprehensive program which 
will provide outreach services and collect information for major Fed- 
eral categorical human services programs. These systems, and others 
like them across the country, have been of great assistance to CAA 
boards and State and local governments in planning programs and 
services for low-income people. The same kind and quality of informa- 
tion is clearly needed by Federal departments and agencies, and by the 
Congress. 

2. Becoming a center of innovative demonstrations which can be 

(IX) 



shown to be duplicable an.l can begin to -n^^"-^^? -^^J^S.^^^tS 
of how to limit the causes and effects ?« Po^'^'-'y- Tl^^rnnh of 0.0;^^^ 
commitment on the part of CSA and the «'^«<;»*^;^,^;*"^^^^^^^ 
ment. Successful innovation is a long and tedious process requiring 
extensive research, demonstration, and replication. 

For example, a worthwhile demonstra ion could ^e earned out com 
bining the environmental action authority under ^ect^^^ 222(a) (10) 
of thf Economic Opportunity Act with the department of labors 
Public Service Employment P°«tions to create an Envi^enU^ 
^f.^^M^<> CorDS Such a program could fulfill the human service neeu 
ff employment and career development for low- and moderate^income 
vou^g people by training and educating professionals and para- 
nrofessionab in the environmental sciences. It would also assist in 
r Nadon's effort to provide .a safe, clean, and ecologically sou^^^ 
environment in which all Americans can live and ^/^/Jhis program 
could be integrated with the programs and services of the Departments 
of Energy and the Interior. Other demonstration programs.empha- 
sizing thi relationship between improving job skills training and 
employment opportunities, and breaking the cycle of poverty also 

""f'^rcomfiira^tibK^ 

neoDle at all levels of government and society. CSA is the only Federal 
Scvcharged%vith responsibility for representing and advocating 
tgeSSow-income p'eople. Th'e State 0^c^sotEcon^n^cO^^^^ 
tunitv and the CAA's have the same responsibility at *!}« SUte and 
local-levels. With the possible exception of *>« CAAs tl^is respons 
bility has not been adequately carried out in the last 8 yea-rs- " ^ 
essential for CSA to begin restoring its own advocacy capabilities as 
wdl aL hose of State offices and Community Action Agencies^ 

Although I have not discussed the provision of serv;rces among these 
prioritres t is important at certain times, in particular kinds of pro- 
Irams "n'd in so^ communities, for CAA s to be prima^ s^^^^^^ 
providers. It is essential, m n.y judgment, ^o'" ^AA s to continue^to 
?^rr.virlp critical outreach services, which have met with great succes. 
P fin t«S Wowever C\A.'s should not undertake to be dup icativ. 
"rS^^provSes^ our li^al communities. Limited Local Initiative 
fuXcaTbe applied to many, other problems rather^hand^^^^^^^^ 
or competing with the services of State and local social service. 

''Thi Senate Subcommittee on Emplovment, Poverty , and Migrato^ 
Labor held hearings on November 21, 1977, and March 13 and 14 1978 
on the various provisions of the Economic Opportunity Act including 
Community Action, Community Economic Developiront, Migrant anc 
Native American Programs, Headstart and Follow Through Energj 
Conservation and Weatherization, and Senior Opportunities anc 

^aY «iese hearings, a number of witnesses provided valuable testi 
mony on the unfulfilled potential of each of these programs For ex 
ample, the Headstart program is now only able to provide educa 
tional health, nutritional and social services to approximately 20 per 
cent of the eligible poverty children in the country. This prograr 



XI 



offers great potential for child development services to be provided 
early m a child's life which will better equip low-income children to 
have successful and positive experiences in school, family life and 
society. 

The Follow Through program provides similar preventive and de- 
velopmental sei*vic€s to children in grades kindergarten through three. 
t ollow Through has generated much parental involvement in com- 
mumties where it operates. As a result, many low-income parents have 
become actively involved in their child's education and, at the same 
time, have endeavored to improve their own education and employ- 
ment opportunities. 

There are many areas of the country, primarily rural, that are not 
served by a community action agency. Extension of community action 
to such areas would provide low-income persons access to health and 
nutrition services, employment programs, energy and weatherization 
activities, services for seniors, ai:d many other services that local com- 
munities determine are needed by its citizens. In addition, low-income 
persons woula be afforded an opportunity to work together to improve 
their community and the lives of the people living there. 

Community development corporations offer the potential for many 
severely economically disadvantaged communities to plan and imple- 
ment comprehensive economic development programs which will 
produce ]obs, increased income, ownership opportunities for com- 
munity residents, reduce dependency, and improve the living environ- 
ment of such communities. 

All of these programs, and others which I have not cited here, offer 
great potential for assisting the poor and low-income communities to 
help themselves improve both their economic and social circumstances. 
1 here is a great need to have this potential realized. 

It IS, therefore, the responsibility of Congress, in conjunction with 
the support of the administration and the American public, to see that 
the poverty programs realize the maximum degree of success possible. 
ihQ reauthorization of the poverty programs this year provides a good 
opportunity to accomplish this. ^ r- & 

. Gaylord Xelson, 

Chairman^ Subcommittee on Employment^ 

Poverty^ and Migratory Labor, 



STAFF REPORT ON THE PROGRAMS 

AUTHORIZED UNDER 

THE ECONOMIC OPPORTUNITY ACT OF 1964, 

AS AMENDED 



PART I: HISTORY OF THE DEVELOPMENT OF THE ANTI- 
POVERTY PROGRAMS AND STATUS REPORT ON PRO- 
GRAMS PRESENTLY AUTHORIZED BY THE ECONOMIC 
OPPORTUNITY ACT OF 1964, AS AMENDED 

The purpose of Part One of this report is to review for the members 
of the Subcommittee the history and development of the anti-pov- 
erty program and to provide a summary of the presently operated 
programs and services which are authorized by the Economic 
Opportunity Act. 

Programs operated under authority of the Economic Opportunity 
Act are administered by the Communitv Services Administration 
(Titles I, II, III, VI, VII and IX) ; the Department of Health, Edu- 
cation, and Welfare's Administration for Children, Youth, and Fami- 
lies (Title V) ; the Department of Health, Education, and Welfare's 
Administration for Native Americans (Title VII) ; and the Legal 
Services Corporation (Title X).* 

Since each of these programs had its beginnings in the former 
Office of Economic Opportunity (OEO) , a short review of the history 
of OEO/CSA and the philosophies which guided the development of 
these programs follows. Later in this section the programs and prog- 
ress of the three agencies responsible for carrying out Titles I through 
IX of the Economic Opportunity Act are reviewed. 

HISTORY OF THE DEVELOPMENT OF THE ANTI- 
POVERTY PROGRAMS 

The Office of Economic Opportunity was established by President 
Lyndon Johnson in 1964, pursuant to Public Law 88^o2, the Eco- 
nomic Opportunity Act. Under the Direction of then Peace Corps 
Director R. Sargent Shriver, a meeting of experts in the field was 
called together in February of 1964 to discuss the development of an 
anti-poverty program and anti-poverty legislation. The objectives 
agreed upon by the participants in this meeting were : (1) to attempt 
to break the cycle of poverty; (2) to establish a mechanism to en- 
courage and support individual and family economic independence; 
and (3) to focus all the existing efforts of the Federal government on 
these goals through the interagency coordination capability of the 
Office of the President. 

This coordination and program integration theme has been promi- 
nent throughout the history of OEO/CSA. In the early stages of 
planning for the anti-poverty program, the focus on coordination 
emerged as a two-pronged strategy. The first element of the strategy 

*Title X is independently authorized and is not discussed in this report. 

(1) 



was at the Federal level where, it was believed, a high powered direc- 
tor of an anti-poverty program in the Office of the President could 
exercise the authority of the President to cut across departmental, 
agency, and programmatic lines within the Federal Government and 
to bring together the numerous resources of the Federal Government 
in an integrated attack on both the effects and the causes of poverty. In 
his remarks at the swearing in of Director Shriver on October 16, 
1964, the President stated that Shriver's duties would be to direct 
"the activities of all executive departments and agencies involved in 
the program against poverty." In his March 16, 1964, Message to Con- 
gress on Poverty, the President indicated the OEO Director would be 
"my personal chief of staff for the War against Poverty." 

Director Shriver stated in testimony before the House Committee 
on Education and Labor on the Economic Opportunity Act of 1964 
(H.R. 10440) that tho OEO would be the managerial arm of the 
President capable of cutting across departmental lines to facilitate co- 
ordination. "The President wants this fauthority] because he wants to 
be at the focal point with respect to this aspect of our domestic effort." 

This theme of a national coordinating agency recurred through- 
out the early years of OEO, including the early days of the Nixon 
Administration when the President elevated the status of his first 
OEO Director, Donald Rumsfeld, to Cabinet level and Rumsfeld im- 
mediately began a reorganization of OEO to focus the resources of the 
Agency on planning, research, demonstration, evaluation, and coor- 
dination. In hearings before the Ad Hoc Task Force on Poverty of 
the House Committee on Education and Labor, Congresswoman Mink 
stated she was pleased with "the President's decision to elevate your 
position as Director of OEO to Cabinet status, because I think it 
lends support to the original belief that we need to have a single 
agency and a single authority to coordinate all of the departments' 
activities if we are to solve this very serious problem." Congressman 
Quie expressed similar support and a hope that this elevated status 
would help Rumsfeld achieve coordination even though previous "sub- 
agency" directors had failed. 

Senator Nelson, during: the introduction of the Economic Oppor- 
tunity Amendments of 1969 [S. 1809], indicated that the Senate bill 
would set up a high level coordinating agency in the White House to 
oversee all pro^rrams aimed at poverty regardless of which Federal 
agency administered them. 

As the Nixon Administration's enthusiasm for the poverty program 
began to wane and ultimately turned hostile, the hope for a single co- 
ordinative agency at the Federal level began to diminish. By 1973, the 
role of OEO was limited primarily to Federal administration of com- 
munity action funds. 

In 1974, a separate agency (CSA) outside the Office of the Presi- 
dent, was created by the Headstart, Economic Opportunity, and Com- 
munity Partnership Act. The primary function of this new agency 
was to administer Federal funds for community action, special impact 
programs, and community economic development. In the ten years 
which preceded the passage of the 1974 amendments, the success of 
efforts aimed at national coordination of anti-poverty activities 



a 

through the OEO was limited and usually confined to modest attempts 
at coordination within single program categories. 

The second element of the original two-part coordination strategy 
was focused upon activities at the local community level. The Bureau 
of the Budget, which was an important participant in the planning of 
the anti-poverty program, strongly supported the community action 
program concept in the President's Task Force on Poverty (1964). 
The Bureau believed, based on its experience and frustration with the 
variety of Federal programs available at the local level, that the com- 
munity action program concept, applied locally all over the country, 
would offer new opportunities for coordinating resources and would 
help force Federal agencies to deal with a single structure at the local 
level. 

In a February 11, 1964, letter to Sargent Shriver regarding Shriver's 
appointment as a Pi'esidential Assistant for the anti-poverty program. 
President Johnson described his concept of how the program would 
develop at the local level. 

"You will also undertake the coordination and integration of federal programs 
with the activities of state and local governmemts and private persons, including 
the Foundations, private businesses and industry, labor unions, and civic groups 
and organizations. I ask that you invite their close cooperation ; that to the extent 
that they desire, you integrate their efforts with our work on the federal level ; 
and that you encourage joint planning, joint programs and joint administration, 
wherever feasible." 

During the first years of OEO, most community action agencies 
(CAA's) were just beginning to plan their structures and programs. 
Their early activities and programs were almost entirely supported 
and funded by OEO. Although many CAA's had the early and strong 
support of their local public and private representatives, a large num- 
ber of communities lacked this participation in developing their initial 
application and establishing their boards. Progress toward coordina- 
tion at the local level was, to a great extent, dependent upon the suc- 
cess of these agencies in achieving and sustaining participation of all 
sectors of the coromunity in the program. 

With the passage of the 1967 amendments to the Act, it became a 
requirement that CAA boards be comprised of one-third elected local 
officials or their representatives, one-third local private sector repre- 
sentatives, and one-third democratically selected representatives of the 
poor. In addition, the amendments provided that a CAA must be a 
State or local government or a public or private nonprofit agency 
designated by the State or local government. Although these amend- 
ments were considered to be the bane of community action at the time 
they were passed, it appears that the amendments did much to make 
many CAA's the recognized focus of low-income program planning 
and coordination for Federal, State, local, and private funds. 

The typical successful community action agency today has a board 
whose membership consists of the mayor (s), county executive (s), 
county board members, city council members (or their representa- 
tives) ; local business, labor, religious, and academic leadership ; and 
publicly elected representatives of the poor in the community. These 



25-371 O - 78 



agencies plan for, coordinate, or operate programs in a diversity of 
areas and categories including: health, welfare, education, youth, 
recreation, employment and training, housing, neighborhood develop- 
ment, aging, transportation, outreach, information and referral, 
alcoholism, drug abuse, urban and rural economic development, food 
and nutrition, early childhood development, legal services, family 
planning, emergency fuel and utility assistance, home weatherization, 
advocacy, counseling, and other programs. CAA's also provide valu- 
able research, data, and information to local and State governments 
and private agencies about the needs and problems of poor people in 
the community. It appears that in many communities this second 
original strategy for coordinating anti-poverty efforts at the local level 
has succeeded and continues to work effectively. 

Following is a summary of programs and services administered by 
the Community Services Administration and the Department of 
Health, Education, and Welfare, authorized by titles I-IX of the 
Economic Opportunity Act. 

PROGRAMS OF THE COMMUNITY SERVICES 
ADMINISTRATION 

The Community Services Administration (CSA) is the central 
agency within the Federal Government for developing, testing, and 
operating programs to reduce poverty in the United States. CSA car- 
ries out its role as an advocate for the nation's poor through and with 
the assistance of the agency's state and local grantees. CSA is rep- 
resented in a variety of activities including individual and group out- 
reach and access assistance, community organization, research and 
demonstration, and advocacy directed at policies and regulatory prac- 
tices adversely affecting the poor and disadvantaged. These activities 
generally occur at all three levels : local. State, and Federal. The 
Agency also plays a lead role in interagency and intergovernmental 
efforts to coordinate and maximize resources and activities designed to 
eliminate poverty or minimize its effects. 

There are six i3asic programs within CSA at this time : Community 
Action, Economic Development, Ener^ry and Weatherization, Senior 
Opportunities and Services for the Elderly, Community Food and 
Nutrition (formerly Emergency Food and Medical Services), and 
State Economic Opportunity Offices. 

Community Action 

Community action is the primary method through which the CSA 
seeks solutions to the social and economic problems related to poverty. 
This concept operates through 879 community action agencies — 
CAA's — located in fifty States and the Trust Territories. CAA's op- 
erate in 2,211 U.S. counties, more than two-thirds of the Nation's 
3,143 counties. Fourteen million persons participate annually in these 
locally based and operated programs. Of this number, 46.1 percent are 
white, 43 percent black, 5.5 percent American Indian, and 5.4 percent 
other nonwhite. Twelve percent of the total participants are Spanish- 
speaking. 

At the heart of the Nation's efforts to eliminate poverty is com- 
munity action. This concept is the basic Federal approach to local 
assistance programs for the poor. Community action is just what the 



name implies — a community marshaling its own abilities, tapping 
State and Federal resources, recruiting professionals, and enlisting 
volunteers to solve the problems of its own low-income citizens. 

Community action agencies carry their services into areas of need. 
With neighborhood centers, mobile units, and outreach workers, 
CAA's seek to inform and involve every family or individual who 
might benefit from the program. 

No two community action agencies are exactly alike because condi- 
tions vary from place to place. The programs, tailormade to address 
specific problems, may include some or all of the following : 

Health services in places where doctors have been scarce and 
hospitals nonexistent ; 

Job development and training in areas of high unemployment ; 
Day-care services that allow needy mothers to work while their 
children are taken care of under watchful supervision ; 

Nutritional meals and profitable crafts and other activities for 
senior citizens ; 

Headstart tutoring and other education assistance to limit the 
effects of inherited poverty ; and 

Housing rehabilitation or help in acquiring a new home. 
With administrative and other funds from the Community Service 
Administration, along with specific program grants from various 
Federal agencies, CAA's combine imagination, resourcefulness, and 
hard work to combat poverty. In fiscal year 1977, approximately $330 
million was available for CAA Local Initiative (Section 221 of the 
EOA) . It is estimated that CAA's generated over $2 billion from Fed- 
eral, State, and local sources for human service programs in their local 
communities. 

Economic Development 

The Federal community economic development program was created 
in 1966 under title I, part D, of the Economic Opportunity Act. This 
legislation was designed to promote significant economic and com- 
munity development in urban and rural areas with a high level of 
unemployment, dependency, and physical deterioration. In 1972, title I, 
part D, was replaced by a more comprehensive title YII. The program 
is administered by the Office of Economic Development (OED) in the 
Community Services Administration. 

OED's programs are a combination of resident-controlled com- 
munity development and profit-oriented business development efforts. 
Though OED programs bear some similarity to those funded by the 
Department of Commerce, there are basic differences. First, Com- 
merce Department programs are mandated to serve the general com- 
munity while OED programs are directed toward the poor. Second, 
Commerce programs assist individual business persons, not commu- 
nities as do OED programs. Finally, Commerce's emphasis is toward 
helping members of minorities rather than low-income people as such. 

The principal function of the Office of Economic Development is 
the administration of the Special Impact or Community Development 
Corporation (CDC) program. OED currently funds 43 CDC's under 
Title VII : 18 serve urban neighborhoods, 18 serve rural communities, 
and 7 are in the planning stages. These CDC's are located in 28 States, 
the District of Columbia, Puerto Kico, and the Virgin Islands. A CDC 



6 

receives between $2 million to $10 million for a 2-year funding 
period — money to be used for administrative and venture purposes. 
New jobs created by CDC's ran^e anywhere from 40 to over 200 during 
such period. Overall funding for economic development has remained 
relatively stable for the past few years at $48 million. The President's 
budget request for fiscal year 1979 proposes a cutback in CDC appro- 
priations to $25.8 million. 

CDC's currently operate various and diverse businesses. Among 
them are manufacturino: plants for toys, canoes, furniture, blue jeans, 
aquariums, and metal fabrication; shopping centers; production and 
marketing cooperatives; franchises; industrial parks; housing proj- 
ects ; land development ; and grocery stores and supermarkets. 

These corporations hire the poor in their localities and provide 
training where needed, while seeking to run profitmaking businesses 
to augment the economic level of the disadvantaged communities, 
CDC's invest, in short, in both people and projects for the benefit of 
both. 

Energy and Weatherization 

Upon its own initiative and using previously appropriated funds, 
OEO/CSA originated a comprehensive weatherization and energy- 
saving program for the poor at the time of the fuel crisis in 1973. 
Working through its network of CAA's, homes were weatherized — 
insulated and made more energy efficient — using cooperatively pur- 
chased materials, as well as volunteers and job trainees. The agency 
later initiated an energy voucher subsidy program to test this method 
of providing the poor with money to buy fuel. Revolving loan funds, 
crisis centers, and emergency fuel depots were also set up by CAA's. 
In 1975, Congress authorized the agency to continue its efforts in fu- 
ture years under the le.<rislation which created the Community Services 
Administration. As of December 31, 1977, the agency had weatherized 
268,252 homes at an average cost of $233 per home. OS A is currently 
providing crisis relief moneys to the poor for high fuel bills resulting 
from the harsh winter this year. 

Senior Opportunities and Services 

Thirty million Americans over 60, particularly the 6.5 million poor 
among them, have problems which are aggi^avated by age. 

Lack of adequate food, housing, medical care, and other essentials 
for a decent and dignified old age are problems the elderly poor ex- 
perience. The Senior Opportunities and Services (SOS) program 
of the Community Services Administration attempts to limit the im- 
pact of these problems both through its own services and by referral 
to other agencies. 

Created under a 1967 amendment to the Economic Opportunity Act, 
SOS projects operate through community action asrencies in both 
urban and rural localities. There are currently 199 SOS projects in 46 
States, Puerto Rico, and the Virgin Islands. 

Community Food and Nutrition 

Chronic malnutrition and hunger are twin spectres which still affect ! 
many of the Nation's poor. This is true despite the existence of food 
stamps and other major food programs. 



For example : though approximately 30 m.illion persons are eligible 
for food stamps, only 16.7 million receive them. Nearly half the poor 
children in day care programs — one-half million persons in all — do not 
have access to child feeding programs. Of the 4.5 million eligible un- 
der the Women, Infants and Children ( WIC) nutrition program, less 
than 25 percent receive food or food supplements. 

Thus, hunger among Americans continues to a substantial degree. 
The goal of the Community Food and Nutrition Program — CFNP — 
of the Community Services Administration is to reduce that gap. It 
seeks to do this in two basic ways : by supplementing the larger food 
programs of other agencies and by funding projects which will in- 
crease the production of food for the poor by giving them the means 
to grow and preserve foods. 

The Community Food and Nutrition Program (formerly Emer- 
gency Food and Medical Services) was established by the Congress in 
1968. It was authorized to supplement, not replace, the larger pro- 
grams. CFNP operates as a national emphasis program, with special 
funding, and seeks to reduce hunger among the poor through direct 
services, outreach, as well as by seeking changes in food programs 
authorized to serve the poor. 

The Community Services Administration funds over 600 Commu- 
nity Food and Nutrition Projects through grants to CAA's, Indian 
Tribal Councils, migrant groups, and other private nonprofit or public 
agencies at State and local levels. 

State Ecoxomic Opportunity Offices 

The Community Services Administration seeks to work closely with 
State and local governments in improving the economic status of the 
poor and the delivery of services to the poor within the various States 
and localities. 

One of the CSA's principal administrative mechanisms for accom- 
plishing this cooperation is the Division of State and Local Govern- 
ment. It functions in two fundamental ways : through the State Eco- 
nomic Opportunity Offices — SEOO's — which are funded in the 50 
States, the District of Columbia, the Virgin Islands, and Puerto Rico ; 
and through coordinating the collaborative efforts of CSA head- 
quarters, the agency's 10 regional offices, and the 50-plus SEOO's. 

State Economic Opportunity Offices, usually located in the Office of 
the Governor of each State, are essential to the overall operation of the 
Division of State and Local Government. 

State Economic Opportunity Offices currently : 

Provide technical assistance to community action agencies, par- 
ticularly those which are rural. Since 1969, rural CAA's have 
received long-term on-site technical assistance from SEOO's 
through State special technical assistance programs; 

Serve as advocates for programs for the poor with other State 
agencies; and 

Serve as coordinators and liaison with other Federal agencies 
in statewide and local programs. 



8 

PROGRAMS OF THE DEPARTMENT OF HEALTH, 
EDUCATION, AND WELFARE 

Headstart Program 

The Headstart program is authorized under the Economic Oppor- 
tunity Act to provide comprehensive developmental services to dis- 
advantaged preschool children. Sinc^ its inception in 1965, Headstart 
has provided health, educational, nutritional, and social services to 
some 6 million children and their families in every L^.S. State and 
terricoiy. Launched by the Office of Economic Opportunity, it is now 
administered by the Administration for Cliildren, Youth, and Fam- 
ilies (ACYF) of the Department of Health, Education, and Welfare. 

In fiscal year 1977, Headstart served 349,000 children through 1,233 
full year grantees, 161 summer grantees, and 33 parent and child cen- 
ters. The program employed nearly 68,000 professionals and non- 
professionals and enlisted the services of about 95,000 volunteers, in- 
cluding many parents. Ten percent of enrollment opportunities in each 
State are made available to handicapped children. In fiscal year 1976, 
Headstart served approximately 32,000 handicapped children in its 
full year programs. 

To achieve its goals, Headstai-t provides not only for the educa- 
tional needs of the children, but also for their social, psychological, 
health, and nutritional requirements. Recognizing the major role of 
the family in child development, Headstart has pioneered in the area 
of parent involvement — providing low-income parents an opportunity 
to help plan and implement local Headstart programs. In many cases, 
Headstart provides training and jobs for parents at the centers, help- 
ing them work their way out of poverty and, often, achieve profes- 
sional status. 

Headstart has also launched a series of innovative projects which 
have had influence on the child development field across the country. 
About 11,000 Headstart children are enrolled in innovative demonstra- 
tions projects. 

For 12 years the Headstart program has played a major role in 
focusing the attention of the nation on the importance of early child- 
hood development, especially in the first five years of life. In many 
ways, the program has had a dramatic impact on the child develop- 
ment field nationwide : serving as a model for many other child devel- 
opment programs, public and private; pioneering in the delivery of 
health services to disadvantaged preschool children ; focusing atten- 
tion on the importance of parent involvement ; and impacting on com- 
munity efforts for low-income families. 

Headstart children benefit from the program in a variety of ways. 
Data conoernin«T^ the program's short-term and lonsf-term effectiveness 
support the following conclusions based on Heaxistart research since 
1969 : 

1. Headstart has been effective in preparing children for later 
reading achievement. Headstart participants perform equal to or 
better than their peers when they begin regular school and there 
are fewer grade retentions and special class placements. 

2. The majority of studies show improvement in performance 
on standardized tests of intelligence or general ability. 



3. Headstart positively contributes to the development of emo- 
tionally mature behavior. Studies of self-concept have been 
favorable when programs operate with a high degree of parent 
participation. 

4. The research has revealed lower absenteeism, fewer cases of 
anemia, more immunizations, better nutritional practices, and, in 
general, better health among children who had pailicipated in 
Headstart. 

Further, research and evaluations of preschool intervention pro- 
grams support the Headstart findings and reveal sustained eifects of 
early intervention beyond the third grade. 

Many Headstart programs are operated or administered by com- 
munity action agencies. In many instances Headstart grantees and 
community action agencies work closely in attempting to help the 
community's institutions meet the needs of low-income children and 
families. 

Follow THRouciH Pro(;ram 

The Follow Through Program was one of the original programs 
started b}^ President Johnson in the Office of Economic Opportunity. 
The program was designed as a developmental program for low- 
income, disadvantaged children and was intended to "follow-through" 
or sustain and expand upon the gains made by childien in Headstart 
or similar preschool programs. The original plan for the program 
called for appropriations of $120 million in the first year. '\Alien the 
amount of money available for poverty programs proved to be less 
than had been expected, the design of and plans for the Follow 
Through Program had to be scaled down. As a result. Follow Through 
was modified to l>ecome a research program which began operation at 
a $15 million funding level in school year 1967-68. 

Follow Through is based on the concept of planned variation utiliz- 
ing different educational and developmental models, each of which has 
developed an approach to the education of disadvantaged children in 
kindergarten through third grade. The program emphasizes com- 
munity and parental involvement and encourages the focusing of avail- 
able local. State, and PVderal resources on low-income persons. 

The local programs (there is at least one program in 49 of the 50 
states) are comprehensive in scope and directly focus on various 
aspects of child learning and development. This includes instruction, 
medical and dental health, nutrition, i)sycliological and social services, 
staff development, and career advancement, 

In the school year 1976-77, approximately 4,000 Follow Through 
classrooms enrolled more than 75,000 children from low-income fami- 
lies (50 percent black, 14 percent Spanish surnamed, 30 percent white, 
5 percent Indian). Approximately 7,500 paraprofessionals were em- 
ployed in the program, the majority of whom were parents of Follow 
Through children. 

Since 1974, the Follow Through Program has been authorized, under 
Title V, Part B (Financial Assistance for Follow Through Pro- 
grams) , of the Economic Opportunity Act, at a funding level of $60 
million. 

For three consecutive years from 1974-1976, the previous Adminis- 
tration attempted to phaseout the program. Each time the Congress 
refused to accept a phaseout. The current Administration is recom- 
mending such a phaseout again. 



10 

Unlike the Headstart Prog^ram, which is administered by the Ad- 
ministration for Children, Youth, and Families, the Follow Through 
Pm^ram is administered by the Office of Education (OE). OE has 
viewed the program as a means b}^ which various educational models 
could be tested with the intent of finding one model that would be 
successful nationwide. After spending several million dollars on the 
evaluation of the various models, the OE evaluation reached the con- 
clusion that there was no one approach to early childhood education 
that would work universally. 

It appears that OE in its evaluation of the program failed to 
recoirnize that Follow Through was intended to be a comprehensive 
child development pro-am which would focus on all aspects of child 
development and seek to maintain the gains accomplished by pre- 
school pro-ams. However, the local programs have attempted to 
recognize the comprehensive nature of the programs, as well as the 
program's emphasis on community and parental involvement, includ- 
ing education of and employment of parents. 

In the communities where a Follow Through Program operates, the 
children participating: in the program, the parents and the community 
have benefited sis^iificantly from the many developmental services 
the program provides. 

Native American Program 

The Administration for Native Americans (ANA) is charged with 
serving the 1.4 million American Indians, Alaskan Natives, and Native 
Hawaii ans who together rank lowest among special population proups 
on most measures of health, education, and socioeconomic well-being. 
The Native American Program is authorized under Title VIII of the 
Economic Opportunity Act. ANA provides financial and technical 
assistance to Indian tribes and g^roups to increase their economic and 
social self-sufficiency. Financial support has been provided primarily 
to create an administrative structure at the tribal or local level which 
serves as a catalyst for obtaining: and managing a broad range of pro- 
grams to meet the needs of the Native American population. In fiscal 
year 1978, $33 million was provided for the Native American Program 
and 219 pro2:rams were funded by ANA. 

During the past year ANA instituted a number of improvements 
in its management system. Regulations were published, new grant and 
contract review procedures were established, evaluation standards 
were developed, and an internal reorganization to increase account- 
ability was initiated. 

Programmatically, ANA provides grant support to 110 tribal orfi:a- 
nizations, 68 urban Indian organizations, and one Native Hawaiian 
consortium. All grantees provide administrative, social, and commu- 
nity services to Native American residents. Programs funded by other 
agencies but administered by ANA grant-funded personnel include 
housing, health, nutrition, manpower, outreach, services for senior 
citizens, alcoholism, day care, and Headstart. 

Grantees have been particularly successful in generating additional 
resources. The 68 urban centers receive $5.4 million annually through 
ANA and have been able to attract an additional $31.5 million in other 
programs and services. 



11 

ANA has attempted to mobilize other agencies' resources to develop 
services targeted to the needs of Native Americans, as in the case of 
the community health representative program of the Indian Health 
Service, the development of Indian community colleges and Indian- 
controlled schools, and the initiation of a special program for aged 
Indians. 

The programs of the ANA fall under three main categories : General 
Community Programming, Training and Technical Assistance, and 
Research and Evaluation. The programs funded are many and varied 
including : food and nutrition, health education, family planning, sen- 
ior citizens services, adult education, arts and crafts development, and 
Indian-owned and operated housing construction companies. They also 
include many economic development programs such as environmental 
farming, cutting and sale of timber products, fishing rights, gem stone 
mining and stone polishing, and coal mining. Training and technical 
assistance programs are in manpower training, financial management, 
proposal writing grantsmanship, management development, report- 
ing and evaluation. Researdh and evaluation programs are in the areas 
of census use studies, planning and management tools and techniques, 
and urban Indian Centers service delivery. 

Many local grantees are organized and operate in their Native 
American communities much like community action agencies. These 
grantees maintain the basic community action philosophy of helping 
people help themselves, and through participation with the CAA's 
in statewide anti-poverty associations and joining in the planning 
and delivery of services for CSA programs such as Community Food 
and Nutrition and Energy Conservation and Home Weatherization. 

PART II: SUMMARY OF OVERSIGHT AND INVESTIGA- 
TIVE REPORTS CONCERNING PROGRAMS AUTHORIZED 
BY THE EOA 

The purpose of Part Two of this report is to provide the Members 
of the Subcommittee with a review and analysis of various reports 
and investigations which have been issued or conducted within the 
past two years concerning management problems, abuses, and recom- 
mended reforms in the Community Services Administration (CSA). 
Problems in other programs authorized under the Economic Oppor- 
tunity Act also are reviewed. 

While the attempts of the Nixon Administration to dismantle the 
federal anti-poverty agencv did not succeed, they left the agency 
frasnnented, poorly managed, and demoralized. 

President Nixon's budget messasre in January 1973, announced that 
GEO would be closed out as of June 30, 1973. Howard Phillips was 
President Nixon's choice to head the agency and preside over the 
planned dismantling. To carry out this mission, Phillips wrote an 
internal OEO memorandum which disr^ussed strategies for handling 
Congress while the dismantling of OEO was accomplished. It said, 
in part, "Thus unless a focus on OEO is politically desirable, program 
transfers and shutdowns should be prompt, before the opposition 
musters strenjrth (or will) to put Humpty Dumpty tosrether asrain." 
The mpmorandum called for "a swift and successful dismemberment" 
of OEO bv June 30th, before there was time for "congressional opposi- 
tion to gather and develop a legislative counter-strategy." 



12 

Since January of 1976, there have been eight reports or invcvstiga- 
tions by Congressional Committees, the General Accounting Office, 
the Congressional Research Service, and the National Advisory Coun- 
cil on Economic Opportunity regarding the administration and man- 
agement of programs authorized under Titles I, II, III, V, VI, VII, 
and VIII of the Economic Opportunity Act. The reports are enumer- 
ated below in chronological order : 

The January 1976 Report of the House Government Operations 
Committee entitled "Management Deficiences in CSA" (the 
Hicks Report) ; 

The Ninth Report of the National Advisory Council on Eco- 
nomic Opportunity in March of 1977; 

The August 1977 Report of the House Government Operations 
Committee entitled "Establishment of Offices of Inspector General 
in Certain Executive Departments and Agencies" (the Fountain 
Report) ; 

The August 1977 Report of the House Government Operations 
Committee entitled "Major Reforms Needed in the Community 
Services Administration" (the first Collins Report) ; 

The September 1977 Report of the ConiQ:ressional Research 
Service entitled "Distribution of Formula Grant Funds Under 
the Headstart Procrram" (the CRS Report) ; 

The October 1977 Report of the Comptroller General entitled 
"National Organizations Which Support the Community Action 
Procrram" (the GAO Report) ; 

The October 1977 House Government Operations Committee 
Report entitled "Operations of CSA-Supported Anti-Poverty 
Associations" (the second Collins Report) ; and 

The oneroing investiiration by the GAO concerning the opera- 
tions of Community Development Corporations under Title VII 
of the Act (the GAO-CDC Report). 
These reports detailed a wide variety of management deficiencies 
as well as some abuses which have occurred at the Federal, State, and 
local levels. Each has included recommendations for correcting the 
identified problems. 

This section summarizes the findings of the various reports accord- 
ing to the following categories : 

(a) Organization and Management; 

(b) Fiscal Program and Grantee Administration ; 

(c) Commimity Economic Development ; 

(d) Advocacy; and 

(e) CSA-Supported Anti-poverty Associations. 

The summary in each category also details the recommendations 
made in each report, the responses of the agcency to those recom- 
mendations, and any additional recommendations of the staff of the 
Employment, Poverty, and Migratory Labor Subcommittee. 

ORGANIZATION AND MANAGEMENT 

Deficiencies in the organization and management of the Community 
Services Administration were detailed in three reports: the Hicks 
Report; the August 1977 Collins Report (first Collins Report) ; and 
the 1977 Report of the National Advisory Council on Economic 
Opportunity. 



18 

Findings and Recommendations 

The Hicks Report identified abuses of personnel practices which 
often involved improper detailing of Intergovernmental Personnel 
Act (IP A) assignments and Schedule C appointments at OEO/CSA. 
The report cited the following as examples of such abuses : 

(1) On four occasions the Director placed high-level schedule 
C employees on IPA assignments of little or no benefit to the 
agency. These assignments were 100 percent Federally funded. 
Two employees, one of whom had vowed he would never return 
to CSA, were assigned to activities in their home towns. One 
other employee simply stopped reporting for work while con- 
tinuing to receive pay. 

(2) On at least two occasions, the Director himself certified, 
under penalty of law, that an employee's duties included responsi- 
bility for functions no longer performed by the agency. 

(3) Five Schedule C advisors were assigned to the Associate 
Director of Program Review for over a year, despite the fact that 
there was no one filling that position. 

(4) The Director placed his Schedule C Executive Assistant 
on IPA, and made plans to request an additional Schedule C posi- 
tion from the Civil Service Commission to replace him. 

(5) On two occasions, non-career employees were converted to 
career positions and immediately left the agency on two-year 
IPA assignments. One of these served no probationary period of 
Federal career service. 

The Subcommittee found the Schedule C and IPA abuses to be 
flagrant and visible and this undoubtedly increased their detri- 
mental impact on morale in the agency. 

The report also cited examples of outdated personnel ceilings, over- 
graded employees, and uneven distribution of workload at CSA. 

The Hicks Report recommended that the agency seek authority 
from the Civil Service Commission to correct personnel problems and 
that the agency reorganize immediately, but the report did not give 
any specific guidelines for the recommended reorganization. 

The first Collins Report pointed out that CSA had failed to respond 
to the recommendations of the Hicks Report and found that continued 
internal mismanagement had crippled efforts by the agency to assist 
its grantees. This report found unacceptably high levels of program 
failures which might have been prevented through better management, 
review, and technical assistance. Unacceptable performance standards 
for agency employees as compared to those of other Federal agencies 
were also identified. The report summarized as follows : 

In the exercise of its oversight responsibilities, the Manpower and Housing 
Subcommittee held hearings in 1975 on alleged personnel abuses in the Com- 
munity Services Administration (CSA). These hearings were followed by a 
report by this Committee, "Management Deficiencies in the Community Serv^- 
ices Administration" (H. Rept. 94-785), dated January 27, 1976. That report 
detailed a number of severe problems that crippled CSA's effectiveness. Per- 
sonnel abuses and poor management practices were prevalent and were 
furthered by CSA's inadequate organizational structure. The agency's fail- 
ure to reorganize following the attempted dismantlement in 1973 had per- 
petuated outdated personnel ceilings, over-graded employees, and markedly 
unequal distribution of work among employees. Employee performance and 
morale had declined, and the management of the agency had not demon- 



14 

strated that it could arrest this decline. The Committee foimd that the 
agency's inability to perform efifectively had led to a breakdown in its role 
as an advocate for the poor within the Federal Government. The first rec- 
ommendation in the Committee's report was that CSA reorganize itself with- 
out further delay and that the Civil Service Commission closely monitor such 
reorganization to insure that management deficiencies are corrected. 

The first Collins Report also recommended that the aj2:ency imple- 
ment the reorganization plan which had been approved by the Office 
of Management and Budget in July of 1976. The report recommended 
that a high priority be placed on program and grantee monitoring and 
evaluation. It further suggested that the agency set higher employee 
performance standards in line with those of other Federal agencies. 

Agency Response to Date 

Subsequent to the issuance of the Hicks Report, CSA Director Bert 
Grallegos resigned. He was succeeded in April 1976 by Director Samuel 
Martinez, who began to resix>nd to the report i-ecommendations. How- 
ever, continued delays including administrative, management, person- 
nel, and programmatic problems, slowed progress toward reorganiza- 
tion. Although the Office of Management and Budget did approve the 
reorganization proposed by Director Martinez in July 1976, he re- 
signed before he could implement it. Robert C. Chase, Deputy Director 
of the agency under Martinez, became CSA Acting Director in 
January 1977. Due to the impending change in administrations at the 
White House and CSA, Chase chose not to proceed with the approved 
reorg^anization during the transition period. 

When Graciela Olivarez assumed her responsibilities as CSA Di- 
rector in April 1977, she reevaluated the reorganization plan and made 
a number of stnictural changes in it. 

At this writing, the reorganization of CSA headquarters is nearly 
complete, and reorganization of re^onal offices is proceeding. The 
agency requested and received special authority from the Civil Service 
Commission to deal with the personnel and workload problems identi- 
fied by the Hicks Report 

Highlights of the new CSA organization are as follows : 

The role of the Office of Community Action (formerly the 
Office of Operations) in planning, administering, and evaluating 
CSA programs funded under Title II, Community Action Pro- 
grams is clarified. A focal point for guiding and monitoring the 
operations of the ten regional offices is pro^Hided. 

An Office of Policy, Planning, and Evaluation is created which 
reports to the Director and pro\dde5 the Director with coordinated 
policy recommendations based on input supplied bv the Assistant 
and Associate Directors and Regional Directors. It exercises pro- 
visions authorized by Title IX of the Economic Opportunitv Act 
of 1964 and conducts agency evaluation consistent with the EOA. 

A new Office of Management has been created which combines 
the former Office of Administration and the Office of Controller. 
Functions now located in the Office of Manasfement include: 
Information, Management and Systems: Labor /^Management 
Relations: Administrative Services: Personnel: Internal Audit: 
Procurement: Data Processing: Financial Management: Fiscal 
Systems and Payroll; and Budget and Program Analysis. 



15 

The title of the OflGLce of Greneral Counsel has been changed to 
the Office of Legal Affairs and General Counsel and this office 
has taken on the following additional responsibilities: Labor/ 
Management and Personnel Division will provide legal advice 
and counsel to the Office of Management and the Human Rights 
Division on personnel administration and equal employment 
policies; Human Rights Division, which formerly stood as an 
office, is absorbed entirely and deals with matters of discrim- 
ination in employment, affirmative action and EEO; External 
Audit Division, formerly under the Office of the Controller, con- 
tinues to appraise the financial integrity of CSA grantee fund 
administration. 

The Office of Economic Development has been strengthened to 
administer CSA's responsibilities under Title VII, Community 
Economic Development. 

A new Office of Interagency and External Affairs has been 
created, which recommends to the Director policies, plans, and 
programs to coordinate or influence the activities and resources 
of Federal, State, and local government and the private sector in 
combating poverty. 

The roles of the Office of Public Affairs and the Office of Con- 
gressional Affairs have been more sharply defined and clarified. 
CSA has also established new guidance on employee standards of 
effectiveness, new policies governing grantee self-evaluation, and 
standard procedures for external evaluations. These new evaluation 
policies were summarized in the Director's response to the Government 
Operations Subcommittee on Manpower and Housinsr.* 

In conjunction with the requirements of 0MB Circular A-110, 
"Uniform Administrative Requirements," CSA has implemented re- 
vised self-evaluation and reporting procedures which will (a) simplify 
the way information is reported; (h) tie reported information to the 
grantee's program goals and the CSA standards of effectiveness ; and 
(c) schedule program reporting to coincide with financial reporting. 
These steps should make program progress reporting more useful and 
timely for both the grantee and the CSA reprional offices. Finally, 
CSA regional offices will Be required to review grantee program 
progress reports as part of the process of certifying that they are meet- 
ing the CSA standards of effectiveness and are therefore eligible for 
refunding. 

ADDmoNAL Staff Recommendations 

Although there has been an extended delay in responding to the 
recommendations of the Hicks Report, the new Administration is 
attempting to address the problems identified by the Hicks Report and 
the first Collins Report. In addition, there are several other actions 
which could be taken. 

The reorganization of CSA regional offices provides one field rep- 
resentative for every six Community Action Agencies. The reports 
discussed in this section pointed to the fact that OAA's need the indi- 
vidual attention and technical assistance of well trained field repre- 
sentatives. It will continue to be difficult for CSA field representatives 
to provide this needed attention and assistance if each representative 
is assigned to an average of six agencies. 

•The actual CSA guidances and instructions may be found in Appendix D. 



16 

At least one energy staff specialist and one employment staff special- 
ist should be assigned to each regional office to provide CAA's with 
expert tedhnical assistance and guidance in these two major program 
areas. The energy and employment areas — including the CSA Energy 
Conservation and Weatherization Program; tlie Department of En- 
ergy Weatherization Program ; the Department of Commerce. Title X 
Program ; and CETA Title I, II, III, and IV Programs — have become 
the largest program categories administered by the CAA's. 

The CSA Headquarters Office reorganization appears to under- 
emphasize these two programmatic areas. The reorganization places 
four staff members on the agency's manpower team and four staff 
members on the energy team. These teams are resixvnsible for ad- 
ministering CSA special emphasis and research and demonstration 
programs, for coordinating with other Federal agency programs, and 
for overseeing the provision of assistance to grantees in the employ- 
ment and energy program areas. 

The CSA Energy Program is second only to the Community Action 
Program in size of budget among the six major programs of the 
agency. In fiscal year 1978 the energy team is expected to admin- 
ister over $265 million in Energy Conservation Program and Special 
Crisis Intervention Program funds. Reviewing, approving, and mon- 
itoring grants and providing technical assistance to grantees for pro- 
grams of this size will require more than a four-person team to be 
properly carried out. 

The manpower team is designed to ]>rovide technical asvsistance, 
guidance, and support to CAA's in employment and training pro- 
grams. AlthouGfh CSA is not authorized to undertake a major employ- 
ment and traininflT program, many CAA's operate or administer large 
portions of the CETA programs in their communities. CSA must be 
able to assist and support CAA's in the operation of employment and 
training programs. This will help insure that Federal employment and 
training programs reach the people they are designed to serve. 

The importance of these two program areas to the Congress is dem- 
onstrated by the passage of legislation last year for major vouth em- 
ployment programs and substantial appropriations for CETA pro- 
grams, the Special Crisis Intervention Program, and the CSA and 
Department of Energy Weatherization programs. 

CSA should consider elevatinsr the role of the manpower and energy 
teams and consider providing the personnel and resources necessary 
to carry out the employment and energy program responsibilities that 
have been described. 

PROBLEMS RESULTING FROM STATUTORY REQUIRE- 
MENTS AND FUNDING CYCLES 

The Hicks Report, the first Collins Report, and the 1977 Advisory 
Council Report each discussed two interlockinp:' procedures which 
have caused continuing management problems for CSA. 

As a result of continuing resolutions passed by the Consrress to keep 
the anti-poverty program alive while the Nixon Administration was 
attempting to dismantle OEO, th& agency funding cvcle went from 
an annual procedure, in which grantee review and refunding occurred 
for one-twelfth of all grantees each month, to quarterly funding for 
all grantees. Quarterly funding requires that all grants be reviewed 



17 

and approved for refunding at the same time four times each year. 
Coupled with the requirement in the 1974 amendments to the Economic 
Opportunity Act that all grants be reviewed and approved by the CSA 
headquarters office, an extremely difficult management problem has 
resulted for the agency. In the past year, CSA has been able to return 
most of its small grantees to annualized funding, but does not have the 
resources to accomplish this for most of its large grantees ($300,000 or 
more annual local initiative, section 221, funding is considered a large 
grantee) . 

Both the House and Senate versions of the Economic Opportunity 
resulted for the agency. In the past year, CSA has been able to return 
authority to the CSA Director to delegate grant review responsi- 
bility to the regional offices, where appropriate. This would help 
correct the present problem and may result in more extensive review 
of individual grants, since the regions will have more time to devote 
to each application. 

It is estimated that returning all remaining CSA grantees to an- 
nualized funding would require a one-time appropriation of $100 
million. Successful local agencies continue to be burdened and re- 
stricted by the delays which quarterly funding has necessitated. The 
Appropriations Committees may wish to take action to correct this 
problem in fiscal year 1979 or fiscal year 1980. 

FISCAL, PEOGRAM, AND GRANTEE ADMINISTRATION 

The first Collins Report, the Fountain Report, the 1977 Advisory 
Council Report, and the CRS Report all identified fiscal, program, or 
grantee responsibility problems in CSA. It appears that these findings 
may be the most damaging of all those identified by the various re- 
ports. These findings will require consistent efforts by the agencies 
involved to correct the problems and prevent their recurrence. 

Findings and Recommendations 

The first Collins Report found that CSA had failed to enforce 
fiscal and programmatic discipline in its progTams and grantees. 
Grantees were not provided with adequate fiscal and program manage- 
ment technical assistance to improve themselves, and regional field 
personnel were poorly trained or untrained in these areas. The report 
found grantee fiscal reports received only cursory reviews at regional 
offices and CSA headquarters. There were no quality controls govern- 
ing the work of grantee auditors who were contracted for by the 
grantee. Expenditures which had been questioned by grantee auditors 
were later allowed by CSA with what the report considered weak 
justification. The CSA Inspections Division was found to be under- 
staffed and its recommendations were sometimes ignored by agency 
management even when alleged criminal activity was involved. 

The report admonished CSA to make sure that Federal funds are 
used for intended program purposes. The report suggested that the 
agency's caoability to provide technical assistance to grantees in pro- 
gram and fiscal management be expanded and that appropriate spe- 
cialized technical assistance be contracted for by CSA. This report 
recommended that CSA increase its quality control of grantee audits, 
giving special attention to grantee travel and consultant costs. The 



18 

report also recommended that strong action be taken ajS^ainst grantees 
who have not submitted required audits. The first Collins Report rec- 
ommended that CSA hire all grantee auditors as is suggested in the 
Comptroller General's Audit Standards. The first Collins Report also 
recommended that an independent Division of Audits and Inspections 
be established within CSA. 

In hearings on H.R. 8588, a bill to create an Office of Inspector 
General in certain Executive Departments and Agencies, the House 
Committee on Government Operations, Subcommittee on Intergovern- 
mental Relations and Human Resources, learned of numerous past 
audit and investifiration problems at CSA. The Committee subse- 
quently included CSA as one of the agencies that would be required 
to establish an Office of Inspector General. 

The Fountain Report determined that CSA had no affirmative pro- 
gram to seek out potential abuse and that the agency relied almost 
entirely upon complaints, which were not always completely investi- 
gated. The report also found that, in the past, program managers had 
to approve all requests for investigations and such requests were some- 
times ignored or inappropriately denied. In at least one instance, the 
report noted that the Inspections Division was ordered to terminate an 
active investigation involving the embezzlement of $10,000. The sub- 
ject of the terminated investigation subsequently became a fugitive. 

The Fountain Report recommended the passage of H.R. 8588, which 
would consolidate existing audit and investigative functions in CSA 
and certain other Federal agencie.s into newly established independent 
office^ of Inspectors General. The iob of the CSA Office of Inspector 
Genejral would be to fully inform the Director and the Congress about 
administrative, manasfement and operations problems, and the prog- 
ress of corrective actions. The office would conduct and supervise all 
audits and inspections of agency programs and o])erations. The In- 
spector General would be appointed by the President with the advice 
and consent of the Senate. 

The House Committee on Government Operations reported H.R. 
8588 on August 5, 1977. The bill was passed by the House on April 18, 
1978, and has subsequently been referred to the Senate Governmental 
Affairs Committee. 

The first Collins Report found that local community action pro- 
grams have often been far ahead of CSA in performance, success, and 
sophistication. During hearings held by the House Manpower and 
Housing Subcommittee, a Committee member stated, ". . . it seems 
that what you are all sayinqf is that the strength of this total operation 
is, at the local level, in the CAA — the community action agencies. 
Most of the problems and most of the weaknesses are coming from the 
Federal level." 

The National Advisory Council on Economic Opportunity's 1977 
Report found that local research and demonstration proiects, often 
initiated and funded by local CAA's, have become increasingly more 
responsible and innovative than national "R and D" projects operated 
or contracted for by CSA. The Advisory Council recommended that 
the majority of CSA research and demonstration funds be directed to 
innovative efforts of grantees at the local level. 

The 1977 Advisory Council Report noted, however, that some CAA 
boards are not in compliance with CSA regulations and recommended 
that CSA review local CAA board compliance and take corrective 



19 

action. The Council also learned that some CAA's may no longer be 
serving the most pressing needs of the local low-income community. 
Programs, services, and facilities, once put in placa, often tend not to 
change even though the size, geographic location, ethnic or racial make- 
up and/or service needs of the low-income community may change 
substantially over time. Staff note this may also be true of programs 
authorized under Title V and Title VIII of the Act, which are not 
always operated or administered by CAA's. 

The Council recommended that annual poverty assessments be re- 
quired of each CAA with appropriate adjustments to programs and 
services. The Council also recommended that CS A provide its grantees 
technical assistance in order to establish and maintain this assessment 
capability. 

The Ad^asory Council's 1977 Report also pointed out that CSA 
regulations were often outdated and inappropriate to the type and 
complexity of programs being operated by its grantees. The Council 
found that the agency had not adequately complied with its reporting 
requirements under Section 608 of the Economic Opportunity Act. 

The Council recommended that CSA comply with its reporting re- 
quirements in a timely manner and also recommended that the agency 
initiate a comprehensive review of all its regulations. In addition, the 
Council recommended that the General Accounting Office undertake 
a review of all programs which have been previously delegated to 
other Federal agencies, such as Headstart, Job Corps, and migrant and 
farm worker programs, to determine whether those delegated pro- 
grams continue to serve the needs of low-income and disaxivantaged 
people in local communities. The Council also requested that Congress 
consider transferring all migrant and farm worker programs of the 
Federal Government to CSA. 

Agency Response to Date 

The agency has responded directly to the Collins Report. Steps 
toward reorganization of audit, inspection, and legal affairs functions 
are being taken which should assist in the correction of the major 
deficiencies identified in the first Collins Report. 

The afirency has reorganized Audit, Human Rights, Inspections, and 
General Counsel responsibilities into one Office of Legal Affairs which 
will be the single enforcement arm of CSA. This new office has and 
will receive increases in staffing. The agency plans to make more flexi- 
ble use of partial nonrefunding of delinquent grantees as an enforce- 
ment tool. The External Audit Division will, on a random basis, review 
10 percent of all grantee auditors' working papers annually and the 
agency will shorten the time lapse between questioned costs and bind- 
ing determinations. The agency plans to deny funding to grantees 
who have not submitted required audits. All inspection requests and 
allegations potentially requiring investigation will be forwarded di- 
rectly to the Office of Legal Affairs, with sole authority for ordering or 
denying an investigation vested in the General Counsel. 

In her letter of response to the Aufifust 1977 Collins Report, Di- 
rector Olivarez summarized the agency's activities : 

Prior to the issuance of the Committee's Report, CSA had already placed 
a high priority on its monitoring efforts by reorganizing the formerly 
separate Inspection, Audit, Human Rights, and General Counsel Division 



25-371 O - 78 



20 

intx) one office to serve as the enforcement arm of the Agency. This office, the 
Office of I^g-al Affairs and General Counsel, is now headed by a Presiden- 
tially appointed Assistant Director who has been delegated the responsibility 
for insuring that OSA law and regulations are religiously followe<l ]>y OSA 
employees and grantees. The new office will receive substantial increases in 
staffing in order to carry out its new mandate. 

Among the changes already accomplished or currently underway with 
the assistance of the new Office of Legal Affairs are the more flexible use 
of partial nonrefunding or suspension of funds rather than limiting CSA 
to the single option of writing off all funding, which is so severe a measure 
that it was at times in the past used as an excuse for doing nothing. Access 
to all appropriate bank accounts, both CSA and private, will be assured by 
either regulation or grant conditions. Where an illegal expenditure of CSA 
funds by a grantee results in certain individuals illegally receiving such 
funds, they will be recovered by means of civil lawsuits initiated by the 
agency against the individuals, rather than by merely disallowing grantee 
expenditures. Legislative changes have been suggested and adopted by the 
Administration which will clarify CSA's legislative authority over the 
control of funds awarded for economic development cor|>orations. Title II 
funding of economic development is being brought under control. Con- 
flict of interest regulations are being strengthened. New, more responsible 
travel regulations and membership dues regulations have been published. 
The regulations regarding payroll deductions for political activities have 
been formally reinterpreted and published. 

The External Audit Division will substantially increase its review^ of 
grantee audit work papers, reviewing on a random basis the work of at 
least 10 percent of the 1,450 indei>endent grantee auditors. 

Each of the 1,750 audit reports received by the External Audit Division 
is reviewed under current practices : also, a hundred or more audits are 
performed directly by the staff of External Audit. Recommendations and 
reouests ba.sed on these reviews are iti each case forwarded to the responsible 
CSA program official for action. The new Office of Legal Affairs is now 
responsMtle for insuring a proper response to these reeonim'^ndati<ms and is 
establishing a systematic pnx'ess for pinpointing responsibility and establish- 
ing deadlines for response and action. 

The entire process of disallowing grantee costs questioned by auditors is 
under review by the Office of Legal Affairs with the goal of shortening the 
time between a cast being questioned and the agency making a binding 
determination. 

Additioxal Staff Recommendations 

The recommendation of the Collins Report that all grantee audi- 
tors be hired by CSA is laudable. However, it mav be too cumbersome, 
expensive, and time consuming, since 1,450 individual grantees are 
involved. CSA should experiment ^Yith aggTesfate auditor contracting 
through State Economic Opportunity Offices for all grantees in a state. 

The reorganized Office of Legal Affairs essentially meets the recom- 
mendation of the Collins Report for an independent di\dsion of audit 
and inspections and should be reviewed after one year of operation to 
determine its effectiveness in correcting abuses. After discussions with 
agency officials, it appears that the inspections function remains 
understaffed even in the CSA reorganization with only ten staff mem- 
bers in place as of April 1, 1978. 

The present reorganization of CSA, with its Office of Legal Affairs 
headed by the ager«cy's Assistant Director and (General Counsel, at- 
tempts to accomplish the same objectives in CSA as those recom- 
mended in the Fountain Report. The new office has taken action to 
correct audit and investigation problems and end consistent abuses. 
As stated above, the office should be reviewed for its effectiveness in 
correcting past problems and abuses after one year of operation. 



21 

The recommendation made by the Advisory Council concerning 
CSA review of CAA board compliance with CSA regulations should 
be carried out by the agency. As part of its continuing reorganization, 
CSA now requires that each regional office have an officer responsible 
for review of grantee compliance with all applicable CSA regulations. 
This officer has the responsibility to continuously review the names, 
dates of election, mandated board representation, and terms of office 
of grantee board members to determine compliance with CSA regula- 
tions. As grant actions proceed through regional offices, the com- 
pliance officer will make recommendations to the regional director 
regarding the grantee's compliance record. 

In S. 2090 the Administration requested changes in the limitation 
on terms of service of private sector and low-income representatives 
to CAA boards. This change would limit private sector and poverty 
representatives to three consecutive and seven total years of board 
service. (Current law limits board service to five consecutive and ten 
total years of service). However, this change may be too restrictive. 
In many CAA's this proposed limitation on board service will effec- 
tively limit board service to one term. Although turnover within the 
board is healthy, two terms of service by legitimately selected member- 
ship can provide effective representation and leadership, and also in- 
crease the continuity of programs and the CAA board itself. 

The Advisory Council was concerned about the feasibility of CAA 
services adapting to the changing needs and problems of low-income 
communities. The Council recommended that an annual poverty assess- 
ment be implemented in each CAA community. An annual needs 
assessment is now provided for in CSA regulations. Many CSA's have 
developed sophisticated, yet inexpensive and easily administered 
assessment techniques. These techniques should be shared with all 
grantees, and technical assistance should be provided by CSA in the 
implementation or improvement of the needs assessment process. CSA 
should also monitor the outcome to assure that program changes are 
made accordingly. Once this capability is substantially in place 
throughout the country, CSA will have an effective national poverty 
information clearinghouse, as discussed below. 

The Advisory Council's recommendation concerning a comprehen- 
sive review by CSA of the agency's regulations is appropriate. Such 
a review should occur at least annually. 

The Employment, Poverty, and MiQ:ratory Labor Subcommittee 
Staff, like the Advisory Council, found an impressive record of re- 
search and demonstration, innovative program design, and compre- 
hensive service integration initiated by many local community action 
agencies. This is particularly interestinq: since this pro<rress has come 
about during a period of declining visibility and effectiveness on the 
part of the anti-poverty program at the national level. CSA should 
promote the successful ventures of its CAA's and build national pro- 
gram, plnnninor, ar»d resear«^h moHels. and demonstrations upon these 
successful local activities. CSA should also use the resources of the 
extensive local aa^ency network, which plans for and serves the needs 
of nearly two-thirds of the nation's poor peoDle, to establish a national 
information clearinsrhouse on the needs and concerns of the nation's 
low-income resider»ts and the programs which demonstrate the greatest 
success in serving those needs. 



22 

The administration of Section 232 research and demonstration funds 
should be returned to the authority of the CSA Director with the 
funds primarily directed to innovative activities at the local level. 

COMMUNITY ECONOMIC DEVELOPMENT 

The Community Services Administration, under authority of Title 
VII of the Economic Opportunity Act, assists forty-three community 
economic development corporations throughout the country. In fiscal 
year 1978 the agency received appropriations of $48.2 million for 
this purpose. 

Community development corporations (CDC's) are private, com- 
munity-based organizations controlled by and responsive to the resi- 
dents of urban neighborhoods and rural communities suffering from 
high levels of poverty, unemployment, and physical deterioration. 
The majority of a CDC's board of directors are democratically selected 
representatives of target area residents, with the balance comprising 
representatives of the business and financial community. 

The purpose of these local development corporations is to plan and 
implement a comprehensive economic development program which 
will produce jobs, increased income, ownership opportunities for com- 
munity residents, reduce dependency, and improve the living environ- 
ment. In pursuing such a program, a CDC carries out the following 
three types of activities: (1) community development^ including em- 
ployment, social services, supportive training; (2) physical develop- 
ment^ including property acquisition, housing construction, rehabili- 
tation, management; and (3) investment development^ including 
investments in loans, loan guarantees, or technical assistance to for- 
profit businesses. 

Findings and Recommendations 

The General Accounting Office (GAO) has been studying the Com- 
munity Development Corporation Program for over a year. A formal 
report is expected in the next months. The GAO presented testimony 
at the oversight hearinsrs of the House Manpower and Housing 
Subcommittee which outline the GAO's initial findings concerning 
Title VII prosrrams. 

The GAO found that the success of programs funded under Title 
VII in attaining: financial self-sufficiency has been limited. This is 
apparently true both in terms of individual ventures and community 
developrnent corporations themselves. The GAO found that CSA had 
no time limit or guidelines to determine how long pro-am support of 
individual ventures should contin\ie before they reach prontability 
and become self-sufficient. The GAO also found that CSA's guarterVy 
reporting system for CDC's did not yield adequate monitoring data 
for CSA to assess program impact and achievement of performance 
goals. 

The Au^ni'st 1977 Collins Report recommended that expansion of 
the Title^ VII program be delayed until adequate pro-am design 
and monitoring technioues were in place and that CSA review its 
policy on the use of Title II funds for economic development activities. 



23 

Agency Response to Date 

The agency has responded to these recommendations in an aggres- 
sive manner. The CSA Office of Economic Development (OED) took 
the following actions to improve the management of the Special 
Impact Program and the performance of community development 
corporation : 

Clussiflcation of CDCs. — The 36 CDC's beyond the initial planning 
stage have been carefully analyzed and classified into three groups 
according to performance level: Operational (viable management 
structures and ventures), Transitional (limited track records or pres- 
ence of significant management/ venture problems) , and Probationary 
(such severe deficiencies as to warrant discontinuation of OED sup- 
port). The classification system permits development of specialized 
policies and strategies tailored to each group. 

Funding Policies. — OED has discontinued automatic two-year re- 
fundings of CDCs, including forward-funding of venture capital. 
Only operational CDC's will continue to receive two-year administra- 
tive refundings together with venture dollars. Transitional CDC's will 
be funded only for one year, without venture dollars. Probationary 
CDC's will be either discontinued or extended on available funds. A 
separate Competitive Investment Capital Fund has been established. 
CDC's can apply for money from this fund on a case by case basis as 
finished business proposals are submitted, rather than receiving un- 
allocated venture dollars as they did in the past, thereby reducing 
unexpended venture fund balances and insuring greater OED control. 

OED Reorganization. — OED has completed a reorganization plan, 
now being implemented, which provides for increased staff account- 
ability, improved decision-making process, and adequate checks and 
balances. Technical assistance functions have been separated from 
monitoring functions, thereby increasing objectivity as well as insur- 
ing adequate support for grantee needs. A senior council of OED 
managers has been established to review all policy and funding recom- 
mendations prior to final decision by the Associate Director. Total 
staff has increased, particularly in professional skill categories such as 
business analysts. Staff trainin^r programs also have been instituted. 

Training and Technical Assistance. — Renewed emphasis has been 
placed on technical support to grantees, to provide solutions as well 
as to identify problems. National contracts have been negotiated to 
provide needed training and technical assistance. The OED network 
of support grants (specialized groups providing legal assistance, 
traininsT, and policy research) has been reorganized and placed under 
one OED division and their roles more carefullv defined and coordi- 
nated. Specialized contracts will be let as needed to meet needs of 
individual CDC's. 

Neio Fiindinq Decision Process. — A new process has been developed 
to strengthen OED decision-making regarding CDC fundings and 
refundings. A step-by-step timetable has been developed for monitor- 
ing grantee compliance with prior grant conditions, OED regulations, 
and grant requirements, and for measuring program performance 
aorainst specific, quantifiable obiectives and milestones. All refundings 
will be based upon structured field reviews, analysis bv OED's senior 
council, and review by CSA's Project Review Board. Grants and ulti- 
mate release of funds will be withheld if all management systems arc 



24 

not satisfactory, audit requirements have not been met, or the grantee 
is deficient in submitting required reports. An improved system has 
also been instituted for tracking and reviewing business proposals 
submitted for feasibility analysis. 

Management Information System. — One of the most serious defi- 
ciencies in past OED management has been the absence of an adequate 
data base for either program evaluation or funding decision-making. 
OED let a contract an September for the design and implementation 
of a comprehensive management information system (MIS) for OED 
and its grantees. The initial design has been completed, available data 
collected, computerized, and validated, and the first reports and anal- 
yses are now being completed. It is anticipated that the system will 
be fully implemented in the next six months. 

Additional Staff Recommendations 

In the past, many practices engaged in by the Office of Economic 
Development have severely limited the ability of CDC's to operate 
successfully in their communities. J'he turnaround time on venture 
approval by OED has, at best, been uncertain — with delays of many 
months while CDC's and local businesses and financial institutions 
nervously wait at the local end. This delay has not been due to the 
need for any extensive venture feasibility studies, since these studies 
are done for OED by the CDC prior to submittal of a request for 
venture approval. 

At the same time OED has reprimanded many CDC's for having 
large balances in their demand deposit accounts from year to year and 
has switched many grantees to line of credit funding (the Administra- 
tion has requested a legislative provision for line of credit funding 
in S. 2090). Venture approval delay can damage the credibility of 
the CDC in its local community and inhibit its ability to do business 
like other business development and financial institutions. If CDC's 
are expected to achieve their social as well as economic impact goals, 
they need complete support and assistance from OED, not delays and 
obstacles. 

OED has, from time to time, required majority equity control in 
the ventures of some CDC's and not those of others. If local business 
expansion can be accomplished through a CDC with the agreement 
of that business to employ area disadvantaged, provide job training, 
and establish a position (s) on the board of directors for CDC board 
members or local low-income residents, majority equity control should 
not be the only criterion for venture approval. The objective is to im- 
prove the economic opportunities and conditions of the low-income 
residents of the impact area. Acquisitions and relocations are not the 
only strategies. Loans and minority equity investments which secure 
commitments to the economic impact, social, and infrastructure build- 
ing qroals of the CDC can be just as important. 

The lender of last resort requirement has also made many ventures 
all but impossible, while these same ventures have not often received 
private sector support after they are denied by OED. Some flexibility 
which would not threaten local lending institutions would be appro- 
priate here. 



25 

The Collins Keport recommended that there be a temporary mora- 
torium on expansion of the community development program. OED 
has taken the right actions in its limited funding policies for transi- 
tional and probationary CDC's. However, the mature or operational 
CDC's should have venture capital available to them. OED should 
also provide funding for plannmg grants to communities just begin- 
ning in the economic development area. Growth of operational CDC's 
or opportunities for potential CDC's should not be halted because some 
CDC's failed. OED should build upon program successes while elimi- 
aating any failures. 

ADVOCACY 

Findings and Recommendations 

Both the Hicks Report and the first Collins Report found that CSA 
had forfeited its role as federal advocate for the low-income com- 
mimity. The first Collins Report indicated that CSA has been ex- 
cluded from councils of government which determine policies and 
regulations affecting millions of poor people daily. This exclusion 
was due, in part, to a lack of respect for the capability of CSA among 
other federal agencies and an uncertainty about CSA's future. 

The first Collins Report indicated that CSA was not monitoring 
the role of State Economic Opportunity Offices (SEOO's) in pur- 
suing policies at the State level which would be of benefit to the low- 
income residents of the States. In some instances the SEOO's have 
become an unrecognizable sub-unit of the State bureaucracy provid- 
ing no more than a maintenance function while advocacy at the State 
level has fallen to individual CAA's or CAA associations — if advocacy 
is conducted at all. 

The Hicks Report and first Collins Report both concluded that 
reorganization was the first essential step necessary to reestablish 
the advocacy role of CSA. The Collins Report recommended that CSA 
improve its stature within the Federal structure and demand input 
into important policy decisions. The report recommended that CSA 
also work to strengthen the SEOO advocacy role at the State level. 
Finally, it was recommended that the agency return to its role as 
innovator within the Federal structure for programs and services 
affecting the poor. 

Agency Response to Date . 

CSA has begun to make efforts to restore its status, voice, and visi- 
bility within Federal policy councils. It has conducted a series of 
policy forums on poverty in the ten Federal reg:ions with local, State, 
and Federal program administrators and policy makers discussing 
programs and problems with low-income representatives. 

The agency has begun to pursue interagency working agreements 
with various Federal agencies and appears to be effectively using its 
limited dollar resources to attract the larger resources of other agen- 
cies to such agreements (much as CAA's have done so effectively in 
many local programs over the years) . 



26 

Additional Staff Recommendations 

It appears that some of the same advocacy and interagency initia- 
tives which are occurring at CSA headquarters should also be pursued 
at the regional level. 

The first Collins Report recommended that the advocacy capability 
of SEOO's be strengthened. It is necessary to point out that SEOO's 
are a part of state government and their advocacy in behalf of policies 
benefiting the poor will often be determined by their role within state 
government. CSA should strengthen the advocacy role of SEOO's and, 
at the same time, support and strengthen the advocacy capabilities of 
individual CAA's and state CAA associations so that the CAA's can 
work both individually and in concert to improve the policies and 
programs affecting the poor in the States and localities. 

CSA-SUPPORTED ANTI-POVERTY ASSOCIATIONS 

CSA had previously supported several anti-poverty associations. 
This situation has changed and, in fact, CSA reviewed all the com- 
munity action trade associations discussed in the various reports. CSA 
now only permits agencies to travel to meetings or contribute member- 
ship dues to associations which are in compliance with CSA regula- 
tions. 

Following is a description of the associations which existed at the 
time of the GAO and Collins reports and which were discussed in 
these reports. A summary of the findings and recommendations made 
by the reports is also included. 

There are two professional associations in which community action 
agency staff, board members, and supporters participate. Agency di- 
rectors have their own association, the National Community Action 
Agency Executive Directors Association (NCAAEDA). The general 
membership association, whose membership numbers approximately 
5,000, is the National Association for Community Development 
(NACD). In addition, the National Legislative Forum is a periodic 
open meeting of directors and staff where legislative concerns and 
priorities are discussed. 

The National Center for Community Action (NCCA) is a legisla- 
lative and policy research group which is funded by a CSA grant of 
over $500,000 annually. The Center has a staff of nineteen. Its board 
is made up of community action agency directors, staff, and persons 
affiliated with organizations interested in the anti-poverty program. 

There were two "lobbying" organizations. The National Community 
Action Trust Fund (NCATF) was created by the NCAAEDA and 
NACD to coordinate the lobbying efforts of the "CAP World." Its 
board was made up of representatives of the regional and national 
structures of the two professional associations. TTie Trust Fund was 
not a registered lobbying organization and apparently conducted no 
direct legislative advocacy. Communities in Action Together (CAT) 
was a registered lobbying organization and engaged in direct legisla- 
tive advocacy and direct contact with elected representatives and con- 
gressional staff. The board was made up of ten resrional representa- 
tives, one from the Director's Association Steering Committee in each 
region. The board also selected an additional representative from each 
region and five representatives at large. 



27 

This proliferation of anti-poverty related organizations was unusual 
within the Federal structure in that all the organizations focused 
almost exclusively on the programs of the Community Services Ad- 
ministration, whose total budget for fiscal year 1978 was only about 
$600 million. These various national anti-poverty organizations were 
a result of and response to the Nixon Administration's efforts to 
dismantle the Federal anti-poverty agency (OEO). 

Findings and Eecommendations 

Both the GAO report requested by the Manpower and Housing Sub- 
committee of the House Government Operations Committee and the 
subsequent October 1977 Collins Report (the second Collins Report) 
concerning the "SCA-Supported Anti-poverty Associations" identified 
association internal management problems, substantial travel and en- 
tertainment expenditures by association presidents, and apparent di- 
version of CS A funds to lobbying efforts. 

A portion of the funds which the two professional associations dis- 
persed came indirectly from Federal anti-poverty funds. Agency mem- 
berships and association conference fees (as well as travel to associa- 
tion functions) were allowable expenses of local community action 
agencies. 

In the past, CSA had refrained from requiring professional associa- 
tion compliance with CSA travel and reporting regulations, maintain- 
ing that the associations were private organizations which did not re- 
ceive CSA funding. 

Although the NCCA, as a grantee, is subject to CSA regulations 
and requirements, the Collins Report found that a 1977 CSA directive 
requiring the Center to terminate its use of NCCA facilities and re- 
sources in support of the NCAAEDA and the Trust Fund (a lobbying 
organization) was initially resisted by the Center and was not com- 
pletely complied with for approximately seven months. 

The second Collins Report reveals that the leadership of the various 
national anti-poverty organizations were essentially a small group 
of community action agency directors, many of whom served simul- 
taneously on several boards of the national organizations. The past 
president of the NCAAEDA, for instance, simultaneously held all 
of the following national positions: NCAAEDA President, member 
of the Legislative Forum (the NCAAEDA President appoints the 
Forum Chairperson), Chairman of the Board of the National Com- 
munity Action Trust Fund, member of the Board of the National 
Center for Community Action, and ex officio member of the NACD 
Board. The past president of the NACD simultaneously held all of 
the following positions: President of NACD, Executive Director of 
NACD*, Board member and officer of the Trust Fund, member of 
the Board of the NCCA, and ex officio member of the Board of 
NCAAEDA. 



♦The NACD Board created the position of Executive Director and hired the past 
president at an annual salary of over $40,000. This action came shortly after he resicmed 
as executive director of his CAA. CSA subsequently suspended the CAA after identifying 
substantial amounts of unpaid apency debts and the mismanagement of agency funds 
during the years the past NACD President/Executive Director was executive director of 
the CAA. 



28 

The second Collins Report and the GAO Report identified question- 
able activities regarding each of the national anti-poverty organiza- 
tions. It should also be noted that, in developing information for its 
report, the House Manpower and Housing Subcommittee had been 
assured by the various organizations that each would make its records 
available to the Subcoimnittee. The XCCA and CAT voluntarily pro- 
vided their records, but NCAAEDA, NACD, and the Trust Fund did 
not. The Subcommittee then subpoenaed the records of the professional 
associations and the Trust Fund. These groups did not comply with 
the original due dates and did not contact the Manpower and Housing 
Subcommittee to offer an explanation for failure to comply. 

The following is a brief summary of the problems identified in the 
second Collins Report and the GAO Report. 

NCAAEDA 

A total of $31,000 was spent on NCAAEDA related travel and 
entertainment by the past association president in two separate time 
periods of approximately one year each. Between October 1975 and 
January 1977, the past president was in travel status for NCAAEDA 
43 percent of available work days while he was the full-time executive 
director of a local community action agency. He attended various 
events on behalf of NCAAEDA in several resort areas and traveled 
to a regional CAA directors' meeting in Hawaii which had been can- 
celed prior to his departure. (He remained in Hawaii six days.) 

The past president's expense vouchers were not always adequately 
documented in the opinion of the Association's treasurer, and were 
sometimes challenged by the treasurer. The past president sou<rht and 
received a board resolution directing: the treasurer to pay all presi- 
dential travel expenditures as submitted. The past president's travel 
schedule was apparently not approv^ed by or reported to the Associa- 
tion board. 

The Association apparently paid fees totaling $37,000 to a single- 
person consultins: firm to coordinate the 1976 national conference of 
the Association (the Association has a membership of about 500 direc- 
tors). The consultant contract was apparently not competitively bid. 

The Association and CSA had no mechanism for evaluating the 
benefit of Association conferences and conventions to the training and 
professional development of participants. 

The past president established a separate Association bank account 
which, contrary to Association by-laws, did not require the treasurer's 
signature. 

Since these problems have been identified, the past NCAAEDA 
board instituted a process to insure that NCAAEDA's records would 
be in order and accessible to appropriate parties and to assure that pay- 
ment of travel, consultant fees, and expenses would be subject to audit 
by a recognized national firm. The Association moved to correct the 
recent history of problems by votino- to hold a referendum on a special 
election of officers at its November 1977 annual meeting. The full mem- 
bership expressed its support for a special election and subsequently 
elected a new slate of officers. 



29 

NACD 

In the first four months of 1977, the past NACD president spent 
$10,451 in NACD funds on his travel and expenses. During the same 
period, he was in travel status 54% of the available work days while 
he was a full-time executive director of a local community action 
agency. There were instances of high accommodation and hospitality 
charges, insufficient documentation of expenses, and at least one appar- 
ent overpayment of travel expenses to the past NACD president. 

The NACD had three separate bank accounts simultaneously, and 
payroll was drawn against all three. There were eight instances in 
which NACD employees apparently received multiple paychecks for 
the same period from two separate bank accounts. 

NACD committees and the board kept extensive meeting schedules, 
and on numerous occasions these meetings were scheduled in high 
cost or resort areas. The past president was questioned on this practice 
by CSA, the Manpower and Housing Subcommittee, and his own 
NACD board. His response was that he was trying to expose anti- 
poverty workers to places and experiences they would not normally 
encounter. 

Tlie NACD could not be considered broadly representative of the 
various constituencies of community action, with a small group of 
large agencies (including, particularly, the past president/executive 
director's former CAA) dominating membership and conference at- 
tendance. In 1975, five CAA's accounted for 28 percent of all conference 
registration fees. 

The NACD election and balloting process was plagued with diffi- 
culties every year and at least one NACD regional affiliate charged 
that this was a strategy on the part of incumbents to maintain their 
positions. This same regional affiliate also charged that the nominating 
process is a closed one controlled by incumbents. In 1977, the only 
active candidate opposing the incumbent president ran as a "write-in" 
candidate. 

The Community Services Administration charged that in 1975 the 
past pi esident/executive director used $3,500 of his former CAA's 
anti-poverty funds to purchase 700 NACD memberships prior to the 
election in that year. He was elected by fewer than 100 votes. 

NCATF 

The GAO determined in at least one instance that Federal anti- 
poverty funds from a state community action association were sent to 
NCATF, a lobbying organization. 

There were several instances in which the NCATF's former na- 
tional coordinator apparently wrote large checks payable to cash, 
endorsed them herself, and received multiple biweekly paychecks. 
The NCATF's officers and attorney were unable to locate the former 
national coordinator after the last of these transactions occurred. 

The NACD (whose funds come partially from fees paid by local 
community action agencies with Federal anti-poverty funds) made a 
loan of $5,000 to NCATF for lobbying purposes, which has apparently 
only partially been repaid. 



30 

In the first sixteen months of operation the NCATF disbursements 
amounted to approximately $41,000. It appeared from information 
submitted in response to the House Manpower and Housing Subcom- 
mittee subpoena that the only benefits NCATF provided to contribu- 
tors during that period were six "action alerts" which were mailed to 
most community action agencies. The alerts essentially paraphrased 
legislative information generally available in other anti-poverty and 
human service association newsletters. 

The NCATF did contract with CAT, the only national community 
action organization which conducted direct lobbying, but disburse- 
ments to CAT amounted to only $2,900— or 7 percent of the NCATF 
total. 

NCATF funds came from voluntary contributions of low and mod- 
erately salaried local community action workers who had no direct 
elective control over the board of the NCATF and who apparently 
received little information about the activities of the NCATF or its 
staff. 

NCCA 

The NCCA received an annual grant of $500,000 for policy related 
research, training, and technical assistance. The NCCA periodically 
publishes a newsletter which reviews issues of interest for community 
action and conducts some regional training and technical assistance 
sessions which some participants have found to be of professional and 
programmatic benefit. 

The NCCA (partly at the direction of its board, which overlapped 
with those of other national anti-poverty organizations) involved 
itself in disputes concerning the NCAAEDA and the NCATF. The 
NCCA, contrary to the instructions of CSA, provided space, staff 
support, and resources to the NCAAEDA. The NCCA provided office 
space and resources to the NCATF, a lobbying organization. A CSA 
directive to NCCA requiring termination of these arrangements was 
initially resisted by the Center and was not totally complied with for 
seven months. A call to NCATF offices by the staff of the Employ- 
ment, Poverty and Migratory Labor Subcommittee on October 12, 1977, 
determined that the lobbying organization had indeed relocated from 
the NCCA headquarters, but the staff of the NCATF indicated the 
move had only taken place the previous week. CSA had first directed 
that the co-location arrangements be immediately terminated in the 
first week of March 1977. 

CAT 

CAT voluntarily provided its records to the Manpower and Hous- 
ing Subcommittee, but its records prior to April 1976 were in the 
possession of the U.S. Department of Justice and were not available 
for analysis by GAO or the Subcommittee on Manpower and Housing. 

Agency Response to Date 

The new leadership at CSA began to address these problems as soon 
as they were properly documented. In September, prior to completion 
of the GAO Report and the report of the Government Operations Com- 
mittee, CSA Director Grace Olivarez wrote all community action 



ai 

agency directors announcing a moratorium on the exi)enditure of 
CSA funds in support of the two professional associations imtil such 
time as the leadership of the organizations changed and the proper 
regulatory and audit safeguards were put in place. The Director's 
letter identified serious administrative and management problems in 
the local agencies of the presidents of the two professional associations. 
Regulations were published requiring prior CSA approval of agency 
travel to association functions and CSA approval of all professional 
associations which receive dues and conference fees from CSA local 
grant funds. 

Additional Staff Recommendations 

A need exists for strong, independent professional and advocacy 
associations which relate to the programs, employees, and supporters 
of the national anti-poverty program. However, the past proliferation 
of organizations, whose leadership and control had fallen to a few 
CAA directors, was detrimental to the anti-poverty program. 

In previous years, NACD had gained a reputation as a via;ble 
national human service and community development organization 
whose issue papers on a variety of national program and policy issues 
were widely read and respected. NCAAEDA was a respected profes- 
sional association with an emphasis on training and technical assist- 
ance for its membership and their agencies and a specific focus on the 
community action program. It is unfortunate that both organizations 
appear to have relinquished these important roles. 

CSA has already taken strong action to correct identified problems 
and abuses. CSA must continue to be firm with the professional orga- 
nizations until leadership and procedures are changed. However, CSA 
should be careful that it does not, through its remedial actions, prevent 
the possibility of viahle, independent associations. 

Staff make the following additional recommendations to the anti- 
poverty organizations and CSA: 

Board members of one national anti-poverty organization should 
not serve on the boards of other national anti -poverty organizations. 
This policy would be beneficial in the case of the two professional 
associations and is essential in the case of the board of the anti-poverty 
lobby. CSA has taken actions which should discourage excess travel 
and the ability of local directors to serve on more than one anti- 
poverty organization board. CSA regulations now require that all 
grantee travel be identified in each grantee's annual work plan, which 
must be approved by the grantee board and by CSA. Travel out of the 
region now requires a separate line item in the annual budget with 
specific destinations and justifications. 

It is common practice for small trade and professional associations 
to organize and coordinate their own conferences with their own staffs. 
Given the apparent $37,000 cost of a consultant to coordinate the con- 
ference of the 500 member NCAAEDA, this common practice of other 
trade associations makes good financial sense. 

No board member of a national anti-poverty organization should be 
a paid employee of that organization. This is particularly true if the 
professional associations receive research, training, and technical 



32 

assistance grants from CSA, as was suggested above. Very high sal- 
aries for the employees of anti-poverty and professional organizations 
do not contribute to a positive image of those organizations. 

The records of each of the national anti-jx)verty organizations 
should be kept in good order and sliould be audited annually by a 
reputable firm. These records should be open and available to appro- 
priate parties. CSA travel policies should be used as internal guide- 
lines by each organization. Separate accounts should be kept by the 
professional associations for receipts derived from private sources and 
those from Federal anti-poverty funds. Disbui-sements for necessary 
entertainment should be made from a non-public fund account. 

PART III: THE HEADSTART ALLOCATION FORMULA 

Funding 

During the review of the Economic Opportunity Act (EGA) 
Amendments of 1977 by the House Education and Labor Economic 
Opportunity Subcommittee, concern developed regarding the HEW 
application of the statutory formula for distribution of Headstart 
funds to the States. 

The Subcommittee requested a report from the Congressional Re- 
search Service concerning tlie effects of various formula options being 
considered by the Subcommittee in the 1977 EOA Amendments. 
CRS discovered, and GAO later confirmed in a le^al opinion, that 
the Department had not followed the existing statutorj^ formula in its 
planned allocations for fiscal year 1978. CRS found that HEW had 
misinterpreted the formula by applying the hold-harmless out of 
proper order and had projected cost-of-living increases for each State 
before applying the formula requirements to available funds.* This 
plannned allocation would have resulted in sixteen states receiving less 
than these states were minimally guaranteed under the formula. 

House and Senate staff members conducted several hours of negoti- 
ating sessions with HEW's Administration for Children, Youth, and 
Families regarding the application of the statutor^^^ formula. HEW 
finally agreed to accept the Congressional interpretation of the for- 
mula, which CRS and GAO had correctly identified. 

The agreement reached on the correct reading of the formula 
procedures is as follows: 

(1) Up to 2 percent set aside for the territories; 

(2) LTp to 20 percent set aside for the Secretary's discretionary 
reserve ; 

(3) Distribute 50 percent of the remaining funds among the 
States based on the relative number of public assistance recipients 
in each State compared to all States. Distribute the other 50 per- 
cent of the remainder among the States based on the relative num- 
ber of related children living with families with incomes below the 
poverty line in each State as compared to all States ; and 

(4) If after completion of the above steps any State has less 
than the amount obligated for use by Headstart programs in the 
State for fiscal year 1975, such States should be increased to the 
fiscal year 1975 level. This hold-harmless provision could be ac- 

•The CRS Report and other Headstart documents may be found in Appendix H. 



33 

complished by either ratably reducing all states over the hold- 
harmless level or through the use of discretionary funds. 

However, no agreement could be reached on what the effective hold- 
harmless level actually should be. Even though the statutory formula 
specifically prescribed fiscal year 1975 as the hold-harmless level, the 
Appropriations Committees in fiscal year 1976, fiscal year 1977, and 
fiscal year 1978 had indicated in report language that all existing 
grantees should receive cost-of-living increases. In addition, the ques- 
tion of which States should receive a fiscal year 1978 cost-of-living in- 
crease was also an issue which could not be settled. 

Members of the House Education and Labor Economic Opportunity 
Subcommittee did reach agreement on what they believed to be the 
correct application of the formula, the hold-harmless level, and cost-of- 
living increases. In a letter to Secretary Calif ano dated November 30, 
1977, the Subcommittee indicated that Headstart funds should be 
distributed in the following manner : 

STEP ONE 

Of the sums appropriated for fiscal year 1978, up to 2 percent will 
be withheld for allocation to the Territories. Up to 20 percent of the 
appropriation may then be reserved for discretionary funding. Of 
the remaining money, one-half is to be distributed on the bavsis of the 
relative number of children living with families below the poverty line 
in each State as compared to all the States ; and one-half on the basis of 
the relative number of public assistance recipients in each State as 
compared to all the States — except that no State is to be allocated less 
than it received in fiscal year 1975. 

STEP TWO 

For those States whose fiscal year 1978 entitlements in Step One 
are less than their actual fiscal year 1977 allocation, funds from the 
Secretary's discretionary reserve are to be used to bring such States 
up to the level of their fiscal year 1977 allocations. 

STEP THREE 

Additional discretionary moneys are to be used to give every State 
a 6-percent cost-of-living increase. With respect to those States whose 
fiscal year 1978 entitlements exceed their fiscal year 1977 allocations, 
an amount equal to 6 percent of the fiscal year 1978 entitlement is to 
be added. With respect to all other States, an amount equal to 6 percent 
of the fiscal year 1977 allocation is to be added to the fiscal year 1977 
level. 

The Senate authorizing committee did not indicate to HEW its 
concurrence with the suggested distribution formula. Although 
HEW indicated it was not in complete agreement with the House 
suggestion, HEW distributed the hscal year 1978 Headstart funds 
according to the House suggestion. 

The controversy over the HeadstaH distribution formula continues. 
The States which benefit from the hold-harmless support the continua- 
tion of a hold-harmless provision along with cost-of-living increases. 
There are many other States, however, which benefit from the actual 
formula and now realize that the hold-harmless prevents these States 
from receiving the expansion money they would if all funds were dis- 
tributed under the formula only. 



34 



REPORT TO THE SENATE 



SUBCOMMITTEE 



ON 



EMPLOYMENT, POVERTY AND MIGRATORY LABOR 
FROM 



Graciela (Grace) Olivarez 
Director 



Appendix A 



COMMUNITY SERVICES ADMINISTRATION 



35 



On September 20, 1977, in response to the House Government Operations 
Committee Report "Major Reforms Needed in the Community Services Administration" 
(H. Rpt. 95-583), CSA Director Graciela (Grace) Olivarez observed 

"Since assuming the duties as Director of the Community 
Services Administration (CSA) on April 29, 1977, I have 
been carefully reviewing and assessing the agency's renewed 
commitment to the Nation's poor and their needs in the late 
1970s and 1980s. Ours is a mission unique in the Federal 
government, intricately interwoven with the patchwork array 
of public, private, Federal, state and local attempts to 
deal with poverty. I strongly believe effective, committed 
leadership and direction are prerequisites to achieving the 
goals of alleviating poverty. 

Reviewing the operations of the agency, and its proper role at 
this challenging time in our history has been a constructive 
and edifying experience. As the Committee is no doubt aware, 
this process began early in the Carter Administration when a 
team from the White House was asked to undertake a review of 
CSA for the President. The initial assessments and recommendations 
of this team provided me, and the new management team I assembled, 
with a good overview of the agency and the framework for a more 
extensive and comprehensive look at its strengths and weaknesses. 

Hand in hand with this assessment went a policy evaluation of the 
needs of the poverty conmunity and this Nation in addressing the 
problems poverty currently presents. Both of these assessments 
are continuing and both have already made important contributions 
to our initial directions and decisions for improving CSA's day- 
to-day effectiveness, as well as its overall impact in the poverty 
community." 

POLICY DIRECTIONS 

In the past ten months the Community Services Administration has greatly 
improved its management, administration and program operations. The deficiencies 
at CSA cited in congressional reports have been corrected or are in the process 
of being remedied. Moreover, new, encouraging program initiatives have been 
undertaken. 



The bleak history of the past several years surrounding CSA is now, for 
the most part, in the past. The present and future belongs to a new administra- 
tion which is firmly committed to the Agency's mission of spearheading the war 
on poverty in America. 



25-371 O - 78 - 4 



36 



- 2 - 



This agency has begun to revitalize its research and demonstration capacity 
and is seeking the cooperation of other federal agencies in the commitment of 
resources to innovative demonstration programs addressing the needs of the 
poor. CSA has traditionally been the federal agency which has served as the 
national laboratory for innovative human service programs addressing the needs 
of the poor. Programs such as Headstart, Job Corps, Legal Services and Home 
Weatherization were tested and developed at CSA. CSA has renewed this emphasis 
on the development of innovative approaches to dealing with poverty problems 
and then "spinning off" workable programs to the appropriate agency or 
institution for sustained and expanded operation. The latest example of this 
approach is the weatherization program which, after being piloted at CSA, 
is being taken over by the new Department of Energy. 

CSA is, by design, a small agency in federal terms. It is able to move 
with flexibility and imagination. As such, it has the need to mobilize 
external resources to bring them to bear on problems of poverty. The Agency 
has begun to move vigorously to make the various Executive Departments 
increasingly aware of their responsibilities to the poor. The Agency's 
Office of Policy, Planning and Evaluation's recently completed impact analysis 
of the "non metropolitan" Community Development Block grants of the Department 
of Housing and Urban Development is just one example of such action. 

These findings can be used to help the Department better focus its 
available resources upon the needs of poor people in the areas served by these 
grants. The information has been shared with HUD and other interested 
organizations. 

The agency has also recognized the importance of increased participation 
by the poverty community in decisions affecting their lives and communities. 
To emphasize this commitment and to take the first step in this ongoing process, 
the Agency recently held a series of ten public policy forums, one in each 
Federal Region. Nearly seven hundred individuals participated in these forums 
and most were poor people rather than representatives of poverty organizations. 
The testimony is now being analyzed and a report to the President, Congress and 
the public is being prepared for completion by March 31, 1978. 

The priorities identified and the concerns expressed by the poor themselve*^ 
will serve as the basis for agency policy and directions in the future. 

IMPROVED MANAGEMENT 

The most consistent criticism of the CSA in recent years has centered 
around the agency's ability to efficiently and effectively direct and manage 
the resources available to it for combatting poverty. A primary concern of 
Congress has been the agency's repeated failure to implement an adequate 
internal reorganization and higher standards of performance. 



37 



- 3 



REORGANIZATION 

When Graciela (Grace) Olivarez assumed the position of Director in April 
1977, she discovered that a proposed organization plan, dated July 1976, had 
been approved by the Office of Management and Budget, as was required by the 
Comnunity Services Act of 1974. After review of the structure, it was 
determined that further clarification was necessary to reflect, from a 
management standpoint, the priorities of the new Administration. Director 
Olivarez ordered an imnediate evaluation and review of the existing structure 
and functions of the agency, separated into two components: Headquarters 
functions and Regional Office functions. 

In order to review these matters, a detailed assessment process was begun 
which included evaluations through personal interviews with every employee in 
the Regional Offices and most in Headquarters Offices. As a result, starting 
on July 29, 1977, a new series of agency instructions began to be issued, 
setting forth the new Headquarters realignments in terms of structure and 
function. This included the detailed, new organization charts. As a result, 
the Headquarters reorganization is in place structurally. A detailed plan for 
the Regional Offices was completed in the Fall of 1977. 

The highlights of what the new CSA organization provides are as follows: 

Clarifies the role of the Office of Community Action (formerly the Office 
of Operations) in planning, administering and evaluating CSA programs funded 
under Title II, Community Action Programs, and provides a focal point for 
guiding and monitoring the operations of the ten Regional Offices. 

Creates an Office of Policy, Planning and Evaluation (OPP&E) which reports 
to the Director and provides the Director with coordinated policy recommendations 
based on input supplied by the Assistant and Associate Directors and Regional 
Directors. OPP&E also exercises provisions authorized by Title IX of the 
Economic Opportunity Act of 1964, as amended, and conducts Agency evaluations 
consistent with the Act. 

Creates a new Office of Management which combines the former Office of 
Administration and the Office of the Controller. Functions now located in the 
Office of Management include: Information, Management and Systems; Labor/ 
Management Relations; Administrative Services; Personnel; Internal Audit; 
Procurement; Data Processing; Financial Management; Fiscal Systems and 
Payroll; and Budget and Program Analysis. 

Changed the title of the Office of General Counsel to the Office of Legal 
Affairs and General Counsel and added the following additional responsibilities: 
Labor/Management and Personnel Division which will provide legal advice and 
counsel to the Office of Management and to the Human Rights Division on 
personnel administration and equal employment policies; Human Rights Division 



38 



- 4 



which formerly stood as an office is absorbed entirely and deals with matters 
of discrimination in employment, affirmative action and EEO; External Audit 
Division which (formerly under the Office of the Controller) continues to 
appraise the financial integrity of CSA grantee fund administration. 

Strengthened the Office of Economic Development to administer CSA's 
responsibilities under Title VII, Community Economic Development. 

Created a new Office of Interagency and External Affairs which recommends 
to the Director policies, plans and programs to coordinate or influence the 
activities and resources of Federal, State and Local governments and the private 
sector in combatting poverty. 

More sharply defined and clarified the roles of the Office of Public 
Affairs and the Office of Legislative Affairs. 

A major component of any reorganization is insuring that the individual 
employees are working in jobs that need to be done and performing those jobs 
in an efficient and acceptable manner. To that end, the agency requested and 
received, special authority from the U. S. Civil Service Commission which will 
allow CSA to address that problem. 

STANDARDS OF PERFORMANCE 

It was clear that the procedures in place to evaluate Agency personnel 
had suffered from mal -administration and disuse. Therefore, a task force of 
key agency officials was established and ordered to produce a new set of 
procedures addressing the question of performance evaluation and supervisory 
accountability. Since that time, the agency has instituted new supervisory 
training programs, which are of a continuing nature, and is presently refining 
the draft proposals for performance evaluation as well as requesting additional 
technical assistance from Personnel Specialists with the Civil Service Commission. 

As a continuing part of the effort, the agency has instituted a new 
series of training programs for key employees, especially the field 
representatives at the various Regional Offices. The Office of Community 
Action, in coordination with the Headquarters Training Office, has begun 
multi-level training of field representatives, i.e., advanced subject 
matter for the senior individuals and more basic subject matter for new 
or less senior field representatives. To date, half of the Regional Offices 
have conducted this training. It is anticipated that the other five Regional 
Offices will conduct this training over the next few months. Also, it is 
anticipated, that immediately following the completion of the reorganization, 
a study will be made of the work of the field representatives including a 
task analysis to identify critical areas of training needs for future and 
on-going nationwide training. 

Training for agency managers and supervisors on the topic of Labor- 
Management Relations has been conducted beginning in October 1977. These 



39 



- 5 - 



training sessions have been successfully conducted at Headquarters and 
Regional Offices with near-perfect attendance by all managers and supervisors. 
These training sessions were completed in March 1978 with a special session 
for CSA Executives at Headquarters. 

As for support staff, training programs are being scheduled. for the 
secretarial and clerical employees to update their skills, knowledge and 
abilities focusing on agency policies and procedures. It is anticipated 
that this training will be conducted from March through May 1978. Specific 
areas of concentration are team building, timekeeping, travel processing 
and Congressional correspondence. As an adjunct to the latter, the Training 
Office has initiated a complete revision and updating of the agency's 
correspondence manual with the view towards simplifying, standardizing and 
streamlining the policies and procedures for receiving, generating and 
processing correspondence at CSA. This new manual will serve as a training 
tool for upgrading secretarial and clerical capability and effectiveness. 

Last, but not least, the Training Office is negotiating an agreement 
with the Civil Service Commission to conduct Upward Mobility training. In 
preparation for this training, the Training Office has conducted Reading 
Development and Communications skills training to enhance the potential of 
Upward Mobility employees once the program begins, hopefully in May 1978. 

There is clear commitment on the part of this Administration to develop 
and insist upon the highest standards of performance from CSA employees; the 
above-mentioned specifics are but the first step in these efforts. 

MONITORING AND EVALUATION 

Congressional reports also urged a high priority on monitoring, review 
and evaluation efforts with respect to programs administered by the agency. 

In response to these concerns, the agency has built its evaluation re- 
search capacity and developed an overall evaluation strategy. The key 
elements of the strategy that have been implemented thus far are (a) evaluation 
of national emphasis programs (b) on-site assessments of grantees on a one-to- 
one basis and (c) improvement in grantee reporting and self-evaluation 
systems and (d) interagency studies. 

Among the national emphasis programs, there are on-going evaluations of 
the Conmunity Food and Nutrition Program and the Rural Home Repair program. 
A combination needs assessment and program evaluation is being conducted for 
the FY 77 Special Crisis Intervention Program. An evaluation of the National 
Center for Community Action was completed in early January. An impact 
evaluation of the weatherization programs supported by CSA is in the design 
stage. 

The CSA Regional Offices are undertaking assessments of selected 
Community Action Agencies and Limited Purpose Agencies. These one-to-one 



40 



- 6 



on-site assessments are being supplemented by a national evaluation of the 
State Economic Opportunity Offices, which is scheduled to begin in early 
May. All 51 SEOOs will be included. A sample of Community Development 
Corporations has been evaluated over the past year by an independent third 
party contractor. Those findings in conjunction with a study of the 
Community Economic Development Program design alternatives will be used as 
the basis for an impact evaluation which is scheduled to begin later this 
Fiscal Year. 

To assist grantees in setting realistic goals and reporting accurately 
on progress, the agency has produced a guidance manual on how they can meet 
the agency's legislated standards of effectiveness. The policy instruction 
on grantee reporting has been revised to emphasize greater involvement by 
local Boards of Directors and focus on goals and results rather than compliance 
issues. 

Recent products generated as a result of the agency's renewed emphasis 
on evaluation research include a study of the effects of Community Development 
Block Grant programming on non-metropolitan areas, a paper submitted to the 
recent White House Conference on balanced national growth and the needs of 
the low income population, and an exploratory study of ways to remove barriers 
and improve accessibility to public places for the low income handicapped 
population. 

GRANTEE ACCOUNTABILITY 

Essential to the achievement of the CSA's community action mission is 
the fulfillment of the administrative responsibility of the agency to over- 
see its grantees and insure the effective expenditure of Federal funds 
through increased technical assistance, sufficient field staff for monitoring 
and review, increased quality controls of audits, and increased, and better 
coordinated, audit and inspection functions. 

Upon official activation of the Training and Technical Assistance 
Division in the Office of Regional Operations, the following outline of 
activities will be implemented under a national training and technical 
assistance strategy: 

Regional Office personnel will provide a regular program of training 
for grantees. CSA auditors will do a Training and Technical Assistance 
(T & T/A) session for auditors who serve CAAs. CSA regional offices will 
also conduct T & T/A for CAA boards. Executive Directors and selected staff 
members. These sessions will stress the responsibilities and duties these 
individuals have and various management models that have been successful 
in the past. There will also be training sessions conducted bV the Regional 
Offices in property management, personnel management and accounting systems. 
The effort will extend throughout FY 1978. 



41 



- 7 - 

The CSA has conducted an extensive study of its Regional Offices. The 
recommended plan for regional office reorganization was submitted in October, 
1977, for approval. Upon final notice from the Office of Management all 
elements of that plan will become operational. The new structures, systems 
and procedures will reduce the clerical work imposed on field representatives 
so that they can spend more time in the field with grantees. The retraining 
of on-board field representatives and basic training for new regional office 
staff will be an important part of the implemented plan. 

A new and concise system for grants management, beginning with reactivation 
of grass roots advocacy planning by the grantee and continuing with stream- 
lining of forms and procedures, will vastly improve the existing ineffective 
means of giving the grantees to better performance and compliance. Automated 
data systems are in the design stage and, with a terminal in each regional 
office, the control network will be complete. Clear assignments of re- 
sponsibility for reviewing documents at eyery step of the grants-making 
process have been described in the plan and other related strategy papers. 

In conjunction with the requirements of 0MB Circular A-llO, "Uniform 
Administrative Requirements," CSA has implemented revised self-evaluation 
and reporting procedures which will (a) simplify the way information is 
reported (b) tie reported information to the grantee's program goals and 
the CSA standards of effectiveness (c) schedule program reporting to coincide 
with financial reporting. These steps should make program progress reporting 
more useful and timely for both the grantee and the CSA Regional Offices. 
Finally, CSA Regional Offices will be required to review grantee program 
progress reports as part of the process of certifying that they are meeting 
the CSA standards of effectiveness and are therefore eligible for refunding. 

COMPLIANCE PROCESS 

On August 9, 1977, the House Committee on Government Operations 
reported that CSA had more than $29 million in unresolved questioned costs 
from audits going back to 1970. In addition to clearing up the backlog 
of unresolved audits, the committee recommended the scope of audit 
activities be expanded to include a training program for both agency and 
grantee financial personnel, as well as CPA firms hired to conduct grantee 
audits. It was also recommended that the agency develop a program to 
emphasize complete implementation of Federal Management Circular (FMC 7302) 
with the view of developing a program of single audits for multi-funded 
grantees. And finally, the committee recommended that CSA develop a 
program of contracting directly with CPA firms rather than allowing 
grantees to engage their own CPAs. Prior to the issuance of the Report, 
CSA had already placed a high priority on its monitoring efforts by 
reorqanizing the formerly separate Inspection, Audit, Human Rights, and 
General Counsel Division inton one office to serve as the enforcement arm 
of the Agency. This office, the Office of Legal Affairs and General Counsel 
is now headed by a Presidential ly appointed Assistant Director who has been 
delegated the responsibility for insuring that CSA law and regulations are 



42 



- 8 - 

religiously followed by CSA employees and grantees. The new office has 
received substantial increases in staffing in order to carry out its new 
mandate. 

Among the changes already accomplished or currently underway in the 
new Office of Legal Affairs are the more flexible use of partial non- 
refunding or suspension of funds rather than limiting CSA to the single 
option of terminating all funding, which is so severe a measure that it 
was at times in the past used as an excuse for doing nothing. Access to 
all appropriate bank accounts, both CSA and private, will be assured by 
either regulation or grant conditions. Where an illegal expenditure of 
CSA funds by a grantee results in certain individuals illegally receiving 
such funds, they will be recovered by means of civil lawsuits initiated 
by the agency against the individuals, rather than by merely disallowing 
grantee expenditures. Legislative changes have been suggested and 
proposed by the Administration which will clarify CSA's legislative 
authority over the control of funds awarded for economic development 
corporations. Title II funding of economic development is being brought 
under control. Conflict of Interest regulations are being strengthened. 
New, more responsible travel regulations and membership dues regulations 
have been published. The regulations regarding payroll deductions for 
political activities have been formally reinterpreted and published. 

EXTERNAL AUDITS 

Each of the 1450 audit reports received by the External Audit 
Division is reviewed under current practices; also a hundred or more 
audits are performed directly by the staff of External Audit. Recommenda- 
tions and requests based on these reviews are in each case forwarded to 
the responsible CSA program official for action. The new Office of Legal 
Affairs is now responsible for insuring a proper response to these 
reconmendations and is establishing a systematic process for pinpointing 
responsibility and establishing deadlines for response and action. 

The entire process of disallowing grantee costs questioned by auditors 
is under review by the Office of Legal Affairs with the goal of shortening 
the time between a cost being questioned and the agency making a binding 
determination. 

CSA concurred in the recommendation that special attention should be 
paid to travel and consultant costs. This is being done by requiring the 
submission of a budget showing more detailed proposed expenses in cost 
categories, by reducing the percentage of allowable transfers of funds 
between cost categories, by requiring that audit reports match actual costs 
incurred with budgeted amounts so that any discrepancies will be highlighted, 
and by greatly restricting retroactive approval of costs incurred in cases 
where prior CSA approval is required. 

In order to further tighten the allowance of questioned costs. 
External Audit Division will be charged with the responsibility of reviewing 



43 



- 9 - 

on a quarterly basis a statistical sampling of the actions taken by program 
officials to allow questioned costs. 

Regional Directors and Program Office heads are now giving priority 
attention to clearing CSA's records of unresolved audits, especially those 
outstanding for years prior to FY 1977. The Director's Office has provided 
specific guidance to all Regional and Headquarters Office Heads to accomplish 
this task. 

If a grantee has not submitted an acceptable audit report for the latest 
full program year prior to the refunding action, agency policy will be to 
deny refunding until the required audit is submitted. Exceptions to this 
policy will be yery rare and will require strong justification from the 
grantee. 

To gain sufficient experience with the advantages and the costs of direct 
contracting, CSA will initiate a pilot program in a defined geographic area 
in which the agency will attempt to contract directly with CPA firms to audit 
the grantees in that area and will evaluate this approach to determine its 
feasibility on a broader scale. In the meantime the expanded program of 
quality assurance should provide an adequate indicator as to the sufficiency 
of CSA audits. 

The agency has begun an experiment to test the concept of CSA's 
contracting directly with CPA firms. A statement of work to be performed 
under direct contract with CPA firms in the State of New Jersey has been 
drafted and contact has been initiated with the Small Business Administration 
to award contracts through Section 8A Small Business set aside program for 
miniority contractors. This is an alternative to increasing CSA procurement 
staff and CSA's administrative costs in this area. 

The External Audit Division provides monthly reports to all management 
offices showing the status of grantee audits. These monthly reports are 
to be used by the appropriate program office (OCA or OED) as a guide for 
expediting the closing of unresolved audits. This approach requires the 
cooperation of Regional Office staff and the Headquarters External Audit 
Division. In response to the Government Operation Committee's recommendation 
the agency developed three goals with respect to audits: reduction of backlog 
with a priority on those audits more than one year overdue; expedite resolu- 
tions of questioned cost identified in audits; and more timely submission 
of audits. 

External Audit has instituted a systematic review of the quality of 
grantee audits performed by CPAs. A statistically selected 10 percent 
sample of a total of 1,450 CPAs for review in FY 78 has been selected. 
This sample will provide a 95 percent level of reliability in evaluating 
CPA audits. Moreover, the agency has begun a program of visiting a small 
number of grantee locations to review their records with the view of 



44 



- 10 - 



further determining the acceptability of CPA audits. 

The agency has expanded its program of providing orientation seminars 
for grantee financial personnel and their CPA firms. Regional Auditors 
are participating in these seminars by explaining CPA audit requirements 
and reponding to questions and concerns of grantee financial personnel 
and their CPA's. 

An emphasis on complete implementation of federal management circular 
(FMC 7302) which requires federal executive departments and agencies to 
enter into cross-service audit agreements in order to increase the incidents 
of single audits of multi-funded grantees (grantees receiving money from 
more than one federal agency) has begun. 

Toward this end, grantees have been asked for total information 
regarding their funding from all federal sources. In addition, they have 
been asked to provide the total cost of their most recent annual audits. 
This information will be used in developing cross-service interagency 
audit agreements designed to implement the single audit approach. A 
major difficulty in establishing this approach, Hes in the fact that CSA, 
unlike many other federal departments, must conduct annual audits of 
grantees whereas other federal departments generally have bi-annual audit 
of grantees. 

A greater emphasis has been placed on closer coordination between 
External Audit and Inspection Divisions. For example, these divisions are 
now working jointly to accomplish the objectives of CSA Audit/Inspection 
Review. 

INSPECTION 

Inspections are routinely initiated by Chief of Inspections and 
General Counsel upon any competent allegation of abuse, mismanagement, 
defalcations or other activity in violation of federal law or CSA regulations. 
Political considerations have been totally eliminated from our inspection 
processes and we have begun to work much more closely with U.S. Attorney's 
Offices across the country. * 

Moreover, the Office of Legal Affairs and General Counsel is about to 
initiate its first civil fraud suit in an effort to collect funds that were 
illegally expended by grantees. With the cooperation of the Justice. 
Department, the Office of Legal Affairs and General Counsel will be filing, 
for the first time, affirmative law suits on behalf of the Community 
Services Administration. CSA expects that this action will have an enormous 
impact resulting in much more careful grantee financial management by putting 
grantees on notice that CSA will no longer tolerate inappropriate expendi- 
ture of funds and will take strong action to recoup those monies. 



45 



- n 



Inspections in the General Counsel's Office are handled as follows: 

1) Competent allegations of abuse or mismanagement .is 
received in the Office of Inspections. 

2) Chief of Inspection makes his recommendation to 
Assistant Director for Legal Affairs and General 
Counsel, 

3) Assistant Director of Legal Affairs in consultation 
with Chief of Inspection, approves inspection. 

4) Inspection is conducted and draft report is prepared. 

5) Draft report is jointly analyzed and reviewed by 
inspector and attorney from General Counsel's Office 
assigned that responsibility. 

6) General Counsel prepares recommendations and 
conclusions for forwarding to appropriate program 
office. 

7) In accordance with CSA Staff Instructions program 
office has fifteen days in which to respond. 

8) If program office does not respond within a two week 
period, Director sends a memorandum giving forty eight 
hours in which to respond. General Counsel analyzes 
response to ascertain whether or not proposed action 
is adequate to correct the situation and bring grantee 
into compliance with CSA regulations and federal law. 

9) If proposed action is adequate. General Counsel 
closes file by forwarding to program office 
Memorandum of Agreement on proposed course of 
action. 

10) If General Counsel does not feel that action to 
be taken is adequate calls for meeting with 
Assistant/Associate Director of the appropriate 
program office to work out mutually agreeable 
solutions contemplating programmatic needs and 
legal requirements. 

With regard to inspections, contrary to prior administrations of 
CSA, as reflected in the House Government Operations Committee's report, 
inspections have been initiated in every case where component recommenda- 
tions have been made by the Chief of Inspection. 



46 



12 



ECONOMIC DEVELOPMENT 

The other major program arm of CSA is the Office of Economic Development 
(OED), OED administers the Title VII Special Impact Program, under which some 
36 operational community development corporations (CDCs) and 7 planning grants 
are funded. OED has had severe management problems in the past. These were 
highlighted in the House Government Operations Committee (Eighth) Report as: 
(1) absence of a program design; (2) inadequate data base for measuring 
program performance; (3) program and funding decisions on the basis of 
subjective and patchwork reviews; and (4) inadequate and untrained staff. In 
the past eight months significant steps have been taken to correct these 
deficiencies and others are planned or underway. 

1. Absence of Program Design 

a. Problem 

Program purposes and objectives were not defined. There 
were no "measurable specifications to which program 
activities could be related." Program was basically 
unsusceptible to evaluation. 

b. Action Steps 

1. OED has developed a series of defined, measurable, 
and quantifiable program impacts against which all 
CDCs will be evaluated. 

2. OED has reviewed its CDCs and classified them, 
according to their level of development and performance. 

2. Inadequate Data Base 

a. Problem 

OED was not collecting sufficient or quantifiable data on 
program performance. Data available were incomplete or 
unreliable, and much of what was needed to evaluate per- 
formance was not available at all. 

b. Action Steps 

1. Despite their shortcomings, current reports required of 
CDCs can provide much useful data. OED is now enforcing 



47 



13 



total and timely compliance with reporting requirements, 
is providing necessary assistance to grantees in preparing 
reports, and is withholding funds and venture approvals 
where reporting compliance is inadequate. 

OED is developing a comprehensive management information 
system (MIS). A contract has been let to design and 
implement such a system at both the OED and grantee levels. 
The available data base is being corrected and analyzed. 

To ensure early and effective development of management 
systems among our new planning grantees, OED has let a 
second contract to provide technical assistance in 
developing personnel, fiscal, and planning systems. The 
contractor will also assist grantees to develop adequate 
management information systems by the end of the planning 
period. 



3. Subjective and Inadequate Funding Decisions 

a. Problem 

. Funding decisions were made on the basis of incomplete or 
non-uniform standards, in which subjective judgments played 
a major role. 

b. Action Steps 

1. OED is now in the process of implementing an internal 
reorganization that will pinpoint accountability, 
centralize funding decisions in the hands of the 
Associate Director while simultaneously broadening 
the base of staff review of funding proposals, and 
provide necessary checks and balances. 

A key feature is the separation of the program monitoring 
function from the technical assistance and funding function. 
Responsibility for providing direct technical assistance 
to CDCs, for developing and managing a network of outside 
support organizations, and for funding and managing grants 
on a day to day basis, will be housed in a Program Assistance 
and Support Division. A third division. Program Development 
and Demonstrations, will be solely responsible for new 
planning and demonstration grants which require very close 
surveillance. A fourth division. Administrative Services, 
will, among other internal management functions, be 
responsible for developing and maintaining the new MIS. 



48 



14 



2. OED has developed and implemented written procedures 
spelling out in detail the various steps in the funding/ 
refunding process. This system will establish a rational 
and completely uniform basis for decision-making and 
problem solving. 

4. Inadequate and Untrained Staff 

a. Problem 

OED had insufficient staff to effectively monitor the program. 
Staff lacked necessary skills to perform functions. 

b. Action Steps 

1. OED staff ceilings under the reorganization have been 
increased by a net of 4 positions (from 38 to 42). 
Reduction of clerical staffing, enabled by the reorganization 
of clerical support into a central word processing unit 
using highly sophisticated equipment, will permit an actual 
increase of six professional positions, all concentrated 
into specialized, technically skilled jobs, including 
business analysts, a computer system analyst, and an 
evaluation specialist. 

2. The greater division of labor among existing staff under 
the new organization will significantly increase account- 
ability and enable a need assessment of available staff 
to be undertaken. 

3. Specific training plans have been developed. One major 
training effort is already underway: 17 employees 
(primarily general ist program analysts) have been en- 
rolled in a special 14-week course in Introductory 
Accounting. Conducted by George Washington University, 
for 2-1/2 hours each week, it is the first in a series 

of courses to enable program analysts to more effectively 
review and evaluate grantee audits and financial reports. 
It will be followed by courses in financial analysis 
and cost accounting. Business analysts have been enrolled 
in more advanced college-level training programs. 

4. Recognizing limitations of current OED staff, even with 
expansion and training, OED is significantly increasing 
its reliance on outside technical assistance and support. 
As noted previously, two major contracts have already been 
let to provide intensive management and technical assistance 
to the new planning grants and to assist OED in the design 



49 



15 - 



and implementation of an MIS. Special small contracts have 
also been let or are planned to provide specialized intensive 
assistance to probationary and transitional CDCs in meeting 
individual management and venture problems. All existing 
grants providing support services to CDCs - legal, program, 
and management technical assistance and staff/board 
training— have been grouped under one OED division where a 
comprehensive coordinated work plan is being developed to 
ensure maximum utilization of existing resources to eliminate 
duplication of effort and to fill indentified gaps. 



CDC Performance 



a. Problem 



The absence of a full range of objective and quantifiable 
performance measures coupled with a lack of constant application 
of performance measures have had a negative effect on the program. 

b. Action Steps 

1. During the funding process, no work plan will be accepted 
unless there are detailed goals and objectives which are 
quantifiable, measurable, and prioritized. These goals 
and objectives at a CDC level will be the basis for 
evaluating and monitoring performance aganist plans. 

2. Each component project for which funds will be released 
by OED must contain similarly clear, quantifiable per- 
formance measures. 

3. As a first step towards a performance related approach, 

a detailed profile of each CDC is currently being developed 
that will include an analysis of: 

- Board capability and needs 

- Planning capability and needs 

- Staff capability and needs 

- Asset/Liability Status 

- Management capability and needs 

- Systems capability and needs, 

including accounting/fiscal, personnel, 
venture monitoring and management, 
reporting, local assistance, staff and 
board training. 

4. Under review for immediate implementation, both on a policy 
and programmatic level, is a measurement framework grouped 



50 



- 16 - 



into the following five areas: 

- Labor (human development, employment, and income) 

- Physical environment (community stability, social 

and community development 

- Social Environment (community stability social and 

community development) 

- Money (loans, equity and income) 

- Institutions (institution-building, self-sufficiency, 

and a viable CDC. 

As a laboratory and incubator, OED is charged with originating new 
approaches to economic development. OED has also been recently criticized 
by Congress for failing to "take the lead in developing new approaches to 
dealing with the problems of poverty, similar to those developed in the 
earlier years of OED..". 

Four new programs have been implemented to meet this challenge, offering 
exciting alternatives to massive unemployment and to rural and Indian economic 
development. 

1. The National Rural Development and Finance Corporation 

Recognizing that the CDC model is not adequate for rural economic 
development, OED has awarded a $3 million grant to the National 
Rural Development and Finance Corporation, a coalition of over 
50 organizations with combined membership of over 5 million rural 
poor people, to create a comprehensive, nationwide strategy for 
rural economic development. 

2. Special Indian Development Program 

Tribal ownership and native traditions are in conflict with standard 
business ownership patterns and institutions. In order to accomodate 
Indian needs and to encourage, rather than impede, economic develop- 
ment on reservations, all Indian programs are now being consolidated 
into a special developmental and demonstration program which will 
attempt to merge business needs with Indian forms of ownership. 

3. National Center for Economic Alternatives 

The recent closing of the steel mill in Youngstown, Ohio, the town's 
largest employer, will mean that about 5000 workers will lose their 
jobs. OED has awarded a seed money contract to the National Center 
for Economic Alternatives (NCEA) to enable them to develop a plan 
and to work with a coalition of religious and civic leaders to find 
private, state, and federal funds to enable the community, through 
a community/ employee stock ownership plan, to buy and modernize the 



51 



- 17 - 



steel plant and save the jobs. NCEA and OED are preparing a nation- 
wide program designed to forecast job losses by region and by industry. 
This plan will allow local communities, with NCEA help, to become 
aware of the impending crisis with plenty of time to mobilize local, 
state, and federal resources to prevent massive unemployment with all 
the attendant social costs before its happens. 

The Department of Housing and Urban Development has been intrigued 
enough by the idea to add a $300,000 grant to the initial CSA money. 
NCEA is also negotiating with EDA, ERDA, and other federal departments 
to aid Youngs town. 

4. Youth Employment in the Private Sector 

In response to the President's concern that poor and minority youths 
receive rapid assistance from federal agencies in procuring 
employment, OED awarded $2.8 million in grants to 6 CDCs for jobs 
for young people. By November 1, 1977, 350 youths had been placed 
in private sector jobs with career potential. The success of this 
effort encouraged the Department of Labor and the Department of 
Housing and Urban Development to enter into negotiation with OED 
for additional youth employment programs using CDC as the prime 
delivery mechanism at the local level. 

Recognizing the need for maximizing the impact on specific target areas 
through a more rational flow of resources, OED has also initiated close 
working relationships with the following agencies in selected areas of common 
interest: 

Department of Labor 

Youth Employment 

Youth Enterprise Development 

Special Economic Stimulus Program-Migrants 

Department of Agriculture 

Special Rural Initiatives-Small Farm Preservation 

Cooperative Development 

Rural Housing Inventory 

Access to Loan and Grant Programs 

Department of Housing and Urban Development 

Neighborhood revitalization and preservation 

through support of community based organizations 
Urban and Indian Housing Inventory 
Access to new construction, property management, apd 



25-371 O - 78 - 5 



B2 

- 18 - 

rehabilitation programs 

Economic Development Administration 

Joint funding on a limited group of community based organizations 
Access to loans, grants, and planning programs 

REGIONAL OPERATIONS 

CSA had been urged to provide increased support for Regional Offices 
with respect to proper staffing and annual review. In response CSA's 
Office of Community Action sent a management anaylsis team to each 
Regional Office. Based on their observations, comprehensive plans were 
developed for reorganizing those Offices so that they might better serve 
the interests of the Government and grantees. Section III. A. of this 
Report details the status of the Reorganization. 

CSA's efforts vis-a-vis Regional Offices are designed to strengthen 
the monitoring and technical assistance capabilities of those Offices. 
In this manner, effective grantees will be given assistance to do their 
jobs better - others will have their deficiencies addressed long before 
they begin impacting negatively on their operations. However, in those 
instances where this assistance is to no avail, CSA will act decisively 
to uphold its statutory and administrative responsibilities. 

As of February 1, 1978, a Regional Coordination Division was established 
in the Office of Regional Operations. The Division's prime responsibility 
is to support Regional Offices in meeting their responsibilities. Lines 
of communication which have long been dormant have been reopened. This is 
particularly important with regard to Regional followup on CSA Inspection 
reports or other indications of defective operations at the grantee level. 

PROFESSIONAL ASSOCIATIONS 

On December 15, 1977, CSA published a regulation governing the 
payment of membership dues and related expenses to professional organizations. 
This regulation prohibits the use of CSA funds to pay for any membership dues 
or organizational fees without specific prior CSA approval. In addition the 
regulation provides review criteria for use by CSA Administering Offices in 
determining relevancy or acceptability of organizations to receive grant 
funds for membership-related expenses. 

For those organizations which receive strong membership support through 
CSA-related grant funds, such as the National Association for Comnunity 
Development (NACD) and the National Coimunity Action Agency Executive 
Directors Association (NCAAEDA), CSA will make specific determinations of 
acceptability based not only on the relevancy of their activities to the 
objectives of the.EOA, but also on such factors as their records for sound 



53 



- 19 - 

management and fiscal systems, availability and acceptability of audits, 
procedures for and conduct of elections, and Federal access to records. 
To date CSA has found the National Association for Community Development 
(NACD) to be unacceptable to receive the CSA funds in payment of member- 
ship dues under this criteria. This determination also precludes expendi- 
tures of grant funds which go to support directly or indirectly activities 
of this organization. This includes travel to meetings or training seminars 
sponsored by NACD, payment of registration fees at such events, etc. 

For those professional organizations, such as the National League of 
Cities, which receive only minimum support through CSA funded membership 
dues, approval will only be dependent upon programmatic relevance. 

In addition CSA has published a regulation to control the use of CSA 
grant funds to travel to organizational functions. This regulation requires 
prior CSA approval for travel out of the geographical limits of the Federal 
Region in which the grantee is located and includes criteria for review of 
requests to expend grant funds for purposes of travel. 

CSA ROLE AS ADVOCATE 

The most fundamental recommendation by Congressional oversight in recent 
years has been that the Agency actively resume its role as representative of 
the poor. As Director Olivarez stated, "I accepted the responsibilities and the 
challenges the President offered me with this appointment with the full under- 
standing and conviction that this Agency's primary role was that of advocate 
for the poor and that role had to be reactivated at all levels for us to 
resume effectively waging the war on poverty." 

One very important factor in resuming the role of advocate has been the 
establishment of the Office of Interagency and External Affairs. The mission 
of this Office is to coordinate for the agency the anti -poverty efforts of 
other Federal agencies, state and local governments, and private sector 
groups as they relate to CSA's mission. 

Specific activities include: 

.. Developing and recommending plans and programs to coordinate 
and influence the activities and resources of Federal, state 
and local government and the private sector in combating 
poverty; 

.. Strengthening existing relationships and developing new 
initiatives between and among all levels of government 
and the private sector concerning anti -poverty activities; 

.. Assisting in the development of agency policies and programs 
as these affect other Federal agencies, state and local 



54 



20 - 



governments and the private sector and relationships between 
these and agency offices and grantees; and 

.. Coordination of agency participation in activities regarding 
Federal coordinating councils such as the Undersecretaries" 
Group, Federal Regional Councils and the White House Inter- 
governmental Work Group. 

In the past, CSA's efforts to work with other Federal agencies and the 
private sector and public sectors have been hindered by the lack of emphasis 
and focus by the leadership of the Agency on building working relationships 
with these groups. 

CSA realizes that it does not have all the resources necessary to meet 
the needs of the poor and that without the cooperation of and resources of 
other agencies and organizations, these needs will not be met. 

Examples of CSA efforts to mobilize resources and advocate for the 
poor include: 

INTERAGENCY 

Interagency agreement with the Department of Labor 
for Supported Work to provide employment for low- 
income, marginally employable individuals (Signed 
2/78). 

Interagency agreement with the Social Security 
Administration (HEW) to increase and improve outreach 
to individuals eligible for Supplemental Security 
Income (SSI). (Signed 1/78). 

Interagency agreement with the Department of Commerce, 
Office of Education (HEW), Law Enforcement Assistance 
Administration (Justice), and the Employment and 
Training Administration (DoL) for a Service Integration 
Project. This project coordinates educational anb social 
services to disadvantaged youths and their families 
through the public school systems in Atlanta, Indianapolis 
and New York. (Signed 9/77 - 10/77). 

An agreement with the Public Health Service (HEW) is being 
negotiated to provide increased immunization to preschool 
children utilizing CAAs for outreach. 

An agreement with the Rural Development Service (Agriculture) 
is being negotiated to promote comprehensive community and 
human resources development in rural areas. 



55 



21 -^ 



An agreement with the Food and Drug Administration (HEW) is 
being negotiated to provide improved consumer health 
protection information to communities by utilizing CAA for 
outreach and to develop joint training and program efforts. 

INTERGOVERNMENTAL 

White House Intergovernmental C^GR) Work Group 

OIEA represents the CSA on this group which is 
chaired by Jack Watson. 

Federal Regional Councils (FRCs) 

OIEA provides advice and assistance to FRCs in developing 
joint planning and programming efforts at the Regional 
level. A policy paper is being developed that will clearly 
articulate Agency objectives in assisting and utilizing 
the FRCs to accomplish the Administration's goals of 
strengthening federal, state-local cooperation and 
coordination. 

CSA is represented by one FRC Chairman (Region I) and provides 
substantial FRC staff support in all ten regions. 

Public Interest Groups 

The Director has met with the Human Resources Committee 
of the National Governors' Association to discuss joint 
efforts in human services programs and activities. (2/78) 

Meetings will be held with other such state and local 
government interest groups in the near future. 

CSA also participates in work sessions and conferences 
with other Public Interest Groups such as the National 
Conference of State Legislatures, the National League of 
Cities, the U.S. Conference of Mayors to develop co- 
operative efforts on behalf of the low-income. 

OIEA will be developing a strategy with other CSA offices 
to more effectively mobilize and coordinate state and 
local resources with CSA resources and programs. 

Citizen Participation 

CSA serves as the lead agency for the compilation and 
distribution of the "Citizen Participation" booklet. To 



56 



22 



date, 40,000 copies of the booklet have been distributed 
to federal, state and local government officials, all 

CSA grantees and private organizations. This booklet will 
be valuable to those people and groups who support citizen 
involvement in federal programs that affect their lives. 

Private Sector 

OIEA is developing a national strategy and operating plan 
to increase and improve private sector involvement in CSA 
activities and programs. This strategy will be developed 
in close coordination with the Office of Community Action 
and the Office of Economic Development to support the program 
goals and needs of their grantees. 

The Director and Deputy Director have already met with such 
organizations such as the Ford Foundation and IBM. In 
addition, the Director has sent letters (2/78) to forty 
major foundations to establish contact and to begin to 
develop working real tionships with them. OIEA will follow- 
up with meetings with interested foundations, CSA Regional 
Offices and grantees to develop mechanisms that will allow 
the resources and experiences of these foundations to be 
most effectively used to benefit the poor. 

GRANTEE INFORMATION SYSTEM 

A Grantee Information System is being developed to assist the 
agency in its advocacy and management functions. The system will utilize 
and track information on all CAA's and other agency programs to meet basic 
legislative and zero-based budgeting data requirements as well as provide 
planning, operational monitoring and evaluation information. Currently, 
the feasibility study and general systems design is being developed in- 
house with assistance from the National Archives and Records Service 
(NARS). It is anticipated that the system will become operational by 
February 1979. 

RESEARCH AND DEMONSTRATION 

CSA is funding a number of innovative demonstration programs with 
a strong research and evaluation component to measure not only success 
rates but the potential for spinoff and replication on a larger scale 
following the period of demonstration. 

As president Carter has stated, CSA should be the national laboratory 
for poverty related research and demonstrations. 



57 



23 



Among the program demonstrations with potential for replication or 
spinoff to another Federal agency are the National Demonstration Water 
Project, the Menninger Foundation Group Homes Project and the Elderly 
Vitcimization Prevention and Assistance Program. 

These are other demonstrations- in the areas of rural housing, health, 
education and economic development. New demonstration initiatives either 
being considered or recently begun include energy conservation for low- 
income district schools, a statewide computerized information and referral 
system (in Michigan), and assistance to organizations dealing with 
undocumented workers ["illegal aliens"). CSA's broad mandate to assist 
the nation's poor permits it not only to undertake specific program 
demonstrations but to examine how different types of programs relate to 
each other in making up a total support system for the poor. 

SUMMARY 

The Report of House and Government Operations Committee on Management 
Deficiencies in CSA first called for a reorganization of CSA in January of 
1976. Little progress was made in implementing the reorganization until 
Director Graciela (Grace) Olivarez assumed her duties in April of 1977. 
Today the reorganization of the Agency is nearly completed, remedial actions 
have been taken to correct and prevent past abuses and deficiencies and 
major new initiatives are being undertaken in planning, program development, 
evaluation, grantee administration and monitoring and management systems. 

Events in the Past eight years of the Agency's history have frequently 
been singled out as a pretext for the shortcomings of CSA. No doubt this 
is true. But it would be wrong to rely on the past as an excuse for 
failures in the present. By the same token, it would be in error to rest 
on current accomplishments. The new administration at CSA will do neither, 
but will strive to overcome vestiges of past problems, seek to expand 
present achievements and continue to pursue new and better ways to serve 
as the vanguard in the war on poverty. 



58 



THE ECONOMIC OPPORTUNITY ACT OF 1964, 
AS AMENDED 



Appendix B 



59 



(Excerpt from Compilation of Selected Federal Laws 
Relating to Employment and Training) 

ECONOMIC OPPORTUNITY ACT OF 1964, 
AS AMENDED 

AN ACT To mobilize the human and financial resources of the 
Nation to combat poverty in the United States. 

Be it enacted by the Senate and House oj Representatives of the United 
States of America in Congress assembled, That this Act may be cited 
as the "Economic Opportunity Act of 1964". 

FINDINGS AND DECLARATION OF PURPOSE 

Sec. 2. Although the economic well-being and prosperity of the 
United States have progressed to a level surpassing any achieved 
in world history, and although these benefits are widely shared 
throughout the Nation, poverty continues to be the lot of a substantial 
number of our people. The United States can achieve its full economic 
and social potential as a nation only if every individual has the oppor- 
tunity to contribute to the full extent of his capabilities and to partici- 
pate in the workings of our society. It is therefore, the policy of the 
United States to eliminate the paradox of poverty in the midst of 
plenty in this Nation by opening to everyone the opportunity for edu- 
cation and training, the opportunity to work, and the opportunity to 
Hve in decency and dignity. It is the purpose of this Act to strengthen, 
supplement, and coordinate efforts in furtherance of that policy. 

It is the sense of the Congress that it is highly desirable to employ 
the resources of the private sector of the economy of the United States 
in all such efforts to further the pohcy of this Act. 

SHORT TITLE 

Sec. 3. Titles I through IX of this Act may be cited as the "Com- 
munity Services Act of 1974". 

DEFINITIONS 

Sec. 4. As used in this Act — 

(1) the term "State" means a State, the District of Columbia, 
the Commonwealth of Puerto Rico, Guam, American Samoa, the 
Virgin Islands, and the Trust Territory of the Pacific Islands; 

(2) the term "United States" when used in a geographical sense 
includes all those places named in paragraph (1) of this section 
and all other places, continental or insular, subject to the juris- 
diction of the United States; 

(3) the term "financial assistance" when used in title II, part 
B of title III, and title VIII includes assistance advanced by 
grant, agreement, or contract, but does not include the procure- 
ment of plant or equipment, or goods or services; 

(173) 



60 



174 

(4) the term ''Secretary" means the Secretary of Health, Edu- 
cation, and Welfare; 

(5) the term "Administration" means the Community Services 
Administration; and 

(6) the term "Director" means the Director of the Community 
Services Administration. 

TITLE I— RESEARCH AND DEMONSTRATIONS 

STATEMENT OF PURPOSE 

Sec. 101. The purpose of the title is to stimulate a better focusing of 
all available local, State, private, and Federal resources upon the 
goal of enabling low-income families, and low-income individuals of 
all ages, including persons of limited English-speaking ability, in rural 
and urban areas to attain the skills, knowledge, and motivations and 
secure the opportunities needed for them to become fully self-sufficient. 

RESEARCH, DEMONSTRATION, AND PILOT PROJECTS 

Sec. 102. (a) The Director may provide financial assistance through 
grants or contracts for research, demonstration, or pilot projects con- 
ducted by public or private agencies which are designed to test or 
assist in the development of new approaches or methods that will 
aid in overcoming special problems or otherwise furthering the 
purposes of this title. 

(b) The Director shall estabUsh an overall plan to govern the 
approval of research, demonstration, and pilot projects and the use of 
all research authority under this title. Such plan shall set forth specific 
objectives to be achieved and priorities among such objectives. In for- 
mulating the plan, the Director shall consult \vith other Federal agencies 
for the purpose of minimizing duplication among similar activities or 
projects and determining whether the findings resulting from any such 
projects may be incorporated into one or more programs for which 
those agencies are responsible. 

(c) No project shall be commenced under this section unless a plan 
setting forth such proposed project has been submitted to the chief 
executive officer of the State in which the project is to be located and 
such plan has not been disapproved by him within thirty days of such 
submission, or, if so disapproved, has been reconsidered by the Director 
and found by him to be fully consistent with the provisions and in 
furtherance of the purposes of this title. 

(d) In making grants or contracts under this title, the Director shall 
give due consideration to requests for funds by applicants receiving 
financial assistance under section 221 or 235 of this Act. 

CONSULTATION 

Sec. 103. In carrying out projects under this title, the Director shall, 
whenever feasible, arrange to obtain the opinions of program partici- 
pants about the strengths and weaknesses of programs. 



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175 

ANNOUNCEMENT OF RESEARCH, DEMONSTRATION, AND PILOT PROJECTS 

Sec. 104. (a) The Director shall make a pubhc announcement 
concerning — 

(1) the title, purpose, intended completion date, identity of 
the grantee or contractor, and proposed cost of any grant or con- 
tract with a private or non-Federal public agency or organization 
for any research, demonstration, or project under this title; 
and 

(2) the results, findings, data, or recommendations made or 
reported as a result of such research, demonstration, or pilot 
project. 

(b) The public announcements required by subsection (a) of this 
section shall be made within thirty days of making any such grant 
or contract, and the public announcements required by subsection (b) 
of this section shall be made within thirty days of the receipt of such 
results, findings, data, or recommendations. 

(c) The Director shall take necessary action to assure that all 
studies, proposals, and data produced or developed with Federal funds 
employed under this title shall become the property of the United 
States. 

(d) The Director shall publish summaries of the results of activities 
carried out pursuant to this title not later than ninety days after 
the completion thereof. The Director shall submit to the appropriate 
committees of the Congress copies of all such summaries. 

PROHIBITION OF FEDERAL CONTROL 

Sec. 105. Nothing contained in this title shall be construed to 
authorize any department, agency, officer, or employee of the United 
States to exercise any direction, supervision, or control over the cur- 
riculum, program of instruction, administration, or personnel of any 
educational institution or school system. 

TITLE II— URBAN AND RURAL COMMUNITY ACTION 

PROGRAMS 

STATEMENT OF PURPOSE 

Sec. 201. (a) This title provides for community action agencies 
and programs, prescribes the structure and describes the functions of 
community action agencies and authorizes financial assistance to com- 
munity action programs and related projects and activities. Its basic 
purpose is to stimulate a better focusing of all available local, State, 
private, and Federal resources upon the goal of enabling low-income 
families, and low-income indi%'iduals of all ages, in rural and urban 
areas to attain the skills, knowledge, and motivations and secure the 
opportunities needed for them to become fully self-sufficient. Its 
specific purposes are to promote, as methods of achieving a better 
focusing of resources on the goal of indi^idual and family self- 
sufficiency — 

(1) the strengthening of community capabilities for planning 
and coordinating Federal, State, and other assistance related to 



62 



176 



the elimination of poverty, so that this assistance, through the 
efforts of local officials, organizations, and interested and affected 
citizens, can be made more responsive to local needs and 
conditions ; 

(2) the better organization of a range of services related to 
the needs of the poor, so that these services may be made more 
effective and efficient in helping families and individuals to over- 
come particular problems in a way that takes account of and, 
supports their progress in overcoming, related problems; 

(3) the greater use, subject to adequate evaluation, of new 
types of services and innovative approaches in attacking causes 
of poverty, so as to develop increasingly effective methods of em- 
ploying available resources; 

(4) the development and implementation of all programs and 
projects designed to serve the poor or low-income areas with the 
maximum feasible participation of residents of the areas and 
members of the groups served, so as the best stimulate and take 
full advantage of capabilities for self-advancement and assure 
that those programs and projects are otherwise meaningful to 
and widely utilized by their intended beneficiaries; and 

(5) the broadening of the resource base of programs directed 
to the elimination of poverty, so as to secure, in addition to the 
services and assistance of public officials, private religious, chari- 
table, and neighborhood organizations, and individual citizens, 
a more active role for business, labor, and professional groups 
able to provide employment opportunities or otherwise influence 
the quantity and quality of services of concern to the poor. 

(b) It is further declared to be the purpose of this title and the 
policy of Community Services Administration to provide for basic 
education, health care, vocational training, and employment oppor- 
tunities in rural America to enable the poor living in rural areas to 
remain in such areas and become self-sufficient therein. It shall not 
be the purpose of this title or the policy of Community Services 
Administration to encourage the rural poor to migrate to urban areas, 
inasmuch as it is the finding of Congress that continuation of such 
migration is frequently not in the best interests of the poor and tends 
to further congest the already overcrowded slums and ghettos of our 
Nation's cities. 

Part A — Community Action Agencies and Programs 

DESIGNATION OF COMMUNITY ACTION AGENCIES: COMMUNITY ACTION 

PROGRAMS 

Sec. 210. (a) A community action agency shall be a State or politi- 
cal subdivision of a State (having elected or duly appointed govern- 
ing officials), or a combination of such political subdivisions, or a 
public or private nonprofit agency or organization which has been 
designated by a State or such a political subdivision or combination 
of such subdivisions, or an Indian tribal government, which — 

(1) has the power and authority and will perform the functions 
set forth in section 212, including the power to enter into con- 
tracts with public and private nonprofit agencies and organiza- 
tions to assist in fulfilling the purposes of this title, and 



63 



177 

(2) is determined to be capable of planning, conducting, ad- 
ministering and evaluating a community action program and is 
currently designated as a community action agency by the 
Director. 

A community action program is a community based and operated 

program — 

(1) which includes or is designed to include a sufficient number 
of projects or components to provide, in sum, a range of services 
and activities having a measurable and potentially major impact 
on causes of poverty in the community or those areas of the 
community where poverty is a particularly acute problem; 

(2) which has been developed, and which organizes and com- 
bines its component projects and activities, in a manner appro- 
priate to carry out all the purposes of this title; and 

(3) which conforms to such other supplementary criteria as the 
Director may prescribe consistent with the purposes and pro- 
visions of this title. 

(b) Components of a community action program may be admin- 
istered by the community action agency, where consistent with sound 
and efficient management and applicable law, or by other agencies. 
They may be projects eligible for assistance under this title, or proj- 
ects assisted from other public or private sources; and they may be 
either specially designed to meet local needs, or designed pursuant to 
the eligibility standards of a State or Federal program providing 
assistance to a particular kind of activity which will help in meeting 
those needs. 

(c) For the purpose of this title, a community may be a city, county, 
multicity, or multicounty unit, an Indian reservation, or a neighbor- 
hood or other area (irrespective of boundaries or political subdivi- 
sions) which provides a suitable organizational base and possesses 
the commonality of interest needed for a community action program. 
The Director shall consult with the heads of other Federal agencies 
responsible for programs relating to work and training programs, 
physical and economic development housing, education, health, and 
other community services to encourage the establishment of coter- 
minous or complementary boundaries for planning purposes among 
those programs and community action programs assisted under this 
title. 

(d) The Director may designate and provide financial assistance 
to a public or private nonprofit agency as a community action agency 
in lieu of a community action agency designated under subsection 
(a) for activities of the kind described in this title where he deter- 
mines (1) that the community action agency serving the community 
has failed, after having a reasonable opportunity to do so, to submit 
a satisfactory plan for a community action program which meets the 
criteria for approval set forth in this title, or to carry out such plan 
in a satisfactory manner, or (2) that neither the State nor any qualified 
political subdivision or combination of such subdivisions is willing to be 
designated as the community action agency for such community or 
designate a public or private nonprofit agency or organization to be 
so designated by the Director. 

(e) No political subdivision of a State shall be included in the 
community action program of a community action agency designated 
under section 210(a) if the elected or duly appointed governing 



64 



178 

officials of such political subdivision do not wish to be so included. 
Such political subdivision, and any public or private nonprofit organi- 
zation or agency designated by it, shall be eligible for designation as 
a community action agency on the same basis as other political sub- 
divisions and their designees. 

(f) In carrying out his responsibilities under this part the Director 
may delegare such functions (other than policymaking functions 
and the final approval of grants and contracts) to a Stat«, in accord- 
ance with criteria and guidelines established by him, as he deems 
appropriate, except that no such delegation shall take place unless all 
the community action agencies withm such State formally indicate 
their approval of such proposed delegation, except that whenever such 
delegated functions include the authority to approve programs within 
such State the Director shall make available to the State, in addition 
to an amount not less than the amount made available to such State 
for State agency assistance under section 231 in the previous fiscal 
year, an amount in each fiscal year equal to such State's share (as 
determined by the formula set forth in the third sentence of section 
235(a)) of the aggregate amount made available during the fiscal 
year ending June 30, 1974, for the operation of regional offices of the 
Office of Economic Opportunity. 

COMMUNITY ACTION AGENCIES AND BOARDS 

Sec. 211. (a) Each community action agency which is a State or 
a political subdivision of a State, or a combination of political sub- 
division, shall administer its program through a community action 
board which shall meet the requirements of subsection (b). Each 
community action agency which is a public or private nonprofit 
agency or organization designated by a State or political subdivision 
01 a State, or combination of political subdivisions, or is an agency 
designated by the Director under section 210(d), shall have a govern- 
ing board which shall meet the requirements of subsection (b). 

(b) Each board to which this subsection applies shall consist of 
not more than fifty-one members and shall be so constituted that 

(1) one-third of the members of the board are elected public officials, 
or their representatives, except that if the number of elected officials 
reasonably available and willing to serve is less than one-third of the 
membership of the board, membership on the board of appointive 
pubHc officials may be counted in meeting such one-third requirement, 

(2) at least one-third of the members are persons chosen in accord- 
ance with democratic selection procedures adequate to assure that 
they are representative of the poor in the area served, and (3) the 
remainder of the members are officials or members of business, in- 
dustry, labor, rehgious, welfare, education, or other major groups 
and interests in the community. Each member of the board selected 
to represent a specific geographic area within a community must reside 
in the area he represents. No person selected under clause (2) or (3) 
of this subsection as a member of a board shall serve on such board 
for more than five consecutive years, or more than a total of ten years. 

(c) Where a community action agency places responsibility for 
major policy determinations with respect to the character, funding, 
extent, and administration of and budgeting for programs to be car- 
ried, on in a particular geographic area within the community in 



65 



179 

a subsidiary board, council, or similar agency, such board, council, 
or agency shall be broadly representative of such area, subject to 
regulations of the director which assure adequate opportunity for 
membership of elected public officials on such board, council, or 
agency. Each community actiqn agency shall be encouraged to make 
use of neighborhood-based organizations composed of residents of the 
area or members of the groups served to assist such agency in the plan- 
ning, conduct, and evaluation of components of the community action 
program. 

(d)(1) The Director shall promulgate such standards or rules 
relating to the scheduling and notice of meetings, quorums (which 
shall be not less than 50 per centum, of the total membership), pro- 
cedures, establishment of committees, and similar matters as he may 
deem necessary to assure that boards which are subject to subsection 
(b) provide a continuing and effective mechanism for securing broad, 
community involvement in programs assisted under this title and 
that all groups or elements represented on those boards have a full 
and fair opportunity to participate in decisions affecting those pro- 
grams. Such standards or rules shall not proclude any such board 
from appointing an executive committee or similar group, which 
fairly reflects the composition of the board, to transact the board's 
business between its meetings. The quorum requirements for any such 
committee or group, which shall not be less than 50 percent of the 
membership, shall be established by the board. 

(2) The Director shall require community action agencies to estab- 
lish procedures under which community agencies and representative 
groups of the poor which feel themselves inadequately represented 
on the community action board or governing board may petition for 
adequate representation. 

(e) The powers of every community action agency governing board 
shall include power to appoint persons to senior staff positions, to 
determine major personnel, fiscal, and program policies, to approve 
overall program plans and priorities, and to assure compliance with 
conditions of and approve proposals for financial assistance under 
this title. 

(f) Each community action board referred to in the first sentence 
of subsections (a) shall — 

(1) have a full opportunity to participate in the development 
and implementation of all programs and projects designed to 
serve the poor or low-income areas with maximum feasible par- 
ticipation of residents of the areas and members of the groups 
served, so as to best stimulate and take full advantage of capa- 
bilities for self-advancement and assure that those programs and 
projects are otherwise meaningful to and widely utilized by their 
mtended beneficiaries; 

(2) have at least one-third of its members chosen in accordance 
with democratic selection procedures adquate to assure that they 
are representative of the poor in the area served ; 

(3) be so established and organized that the poor and residents 
of the area concerned will be enabled to influence the character of 
programs affecting their interests and regularly participate in the 
planning and implementation of those programs; and 

(4) be a continuing and effective mechanism for securing broad 
community involvement in the programs assisted under tms title . 



•66 



180 

(g) The Director shall ensure that no election or other democratic 
selection procedure conducted pursuant to clause (2) of subsection 
(b), or pursuant to clause (2) of subsection (f), shall be held on a 
Sabbath Day which is observed as a day of rest and worship by 
residents in the area served. 

SPECIFIC POWERS AND FUNCTIONS OF COMMUNITY ACTION AGENCIES 

Sec. 212. (a) In order to carry out its overall responsibility for 
planning, coordinating, evaluating, and administering a community 
action program, a community action agency must have authority 
under its charter or applicable law to receive and administer funds 
under this title, funds and contributions from private or local public 
sources which may be used in support of a community action pro- 
gram, and funds under any Federal or State assistance program 
pursuant to which a public or private nonprofit agency (as the case 
may be) organized in accordance with this part could act as grantee, 
contractor, or sponsor of projects appropriate for inclusion in a com- 
munity action program. A community action agency must also be 
empowered to transfer funds so received, and to delegate powers 
to other agencies, subject to the powers of its governing board and its 
overall program responsibilities. This power to transfer funds and 
delegate powers must include the power to make transfers and dele- 
gations covering component projects in all cases where this will con- 
tribute to eflficiency and effectiveness or otherwise further program 
objectives. 

(b) In exercising its powers and carrying out its overall responsi- 
bility for a community action program, a community action agency 
shall have, subject to the purposes of this title, at least the following 
functions : 

(1) Planning systematically for and evaluating the program, 
including actions to develop information as to the problems and 
causes of poverty in the community, determine how much and 
how effectively assistance is being provided to deal with those 
problems and causes, and establish priorities among projects, 
activities and areas as needed for the best and most efl&cient use 
of resources. 

(2) Encouraging agencies engaged in activities related to the 
community action program to plan for, secure and administer as- 
sistance available under this title or from other sources on a 
common or cooperative basis; providing planning or technical as- 
sistance to those agencies; and generally, in cooperation with 
community agencies and officials, undertaking actions to improve 
existing efforts to attack poverty, such as improving day-to-day 
communication, closing service gaps, focusing resources on the 
most needy, and providing additional opportunities to low-income 
individuals for regular employment or participation in the pro- 
grams or activities for which those community agencies and offi- 
cials are responsible. 

(3) Initiating and sponsoring projects responsive to needs of 
the poor which are not otherwise being met, with particular em- 
phasis on providing central or common services that can be drawn 
upon by a variety of related programs, developing new approaches 
or new types of services that can be incorporated into other pro- 
grams, and filling gaps pending the expansion or modification of 
those programs. 



67 



181 

(4) Establishing effective procedures by which the poor and 
area residents concerned will be enabled to influence the character 
of programs affecting their interest, providing for their regular 
participation in the implementation of those programs, and pro- 
viding technical and otner support needed to enable the poor and 
neighborhood groups to secure on their own behalf available 
assistance from pubUc and private sources. 

(5) Joining with and encouraging business, labor, and other 
private CToups and organizations to imdertake, together with 
pubUc officials and agencies, activities in support of the com- 
mimity action program which will result in the additional use of 
private resources and capabilities, with a view to such things as 
developiQg new employment opportunities, stimulating invest- 
ment that will have a measurable impact in reducing poverty 
among residents of areas of concentrated poverty, and providing 
methods by which residents of those areas can work with private 
groups, firms, and institutions in seeking solutions to problems of 
conimon concern. 

ADMINISTRATIVE STANDARDS 

Sec. 213. (a) Each community action agency shall observe, and 
shall (as appropriate) require or encourage other agencies partici- 
pating in a community action program to observe standards of 
organization, management and administration which will assxu-e, so 
far as reasonably possible, that all program activities are conducted 
in a manner consistent with the purposes of this title and the objective 
of providing assistance effectively, efficiently, and free of any taint of 
partisan pohtical bias or personal or family favoritism. Each com- 
munit}' action agency shall establish or adopt rules to carry out this 
section, which shall include rules to assure full staff accountability 
in matters governed by law, regulations, or agency policy. Each com- 
mimity action agency shall also provide for reasonable public access 
to information, including but not hmited to public hearings at the 
request of appropriate community groups and reasonable public access 
to books and records of the agency or other agencies engaged in 
program activities or operations involving the use of authority or 
funds for which it is responsible. And each community action agency 
shall adopt for itself and other agencies using funds or exercising 
authority for which it is responsible, rules designed to establish 
specific standards governing salaries, salary increases, travel and per 
diem allowances, and other employee benefits; to assure that only 
persons capable of discharging their duties with competence and integ- 
rity are employed and that employees are promoted or advanced 
imder impartial procedures calculated to improve agency perform- 
ance and effectiveness; to guard against personal or financial conflicts 
of interests; and to define employee duties of advocacy on behalf of 
the poor in an appropriate manner which will in any case preclude 
employees from participating, in connection with the performance of 
their duties, in any form of picketing, protest, or other direct action 
which is in violation of law. 

(b) The Director shall prescribe rules or regulations to supple- 
ment subsection (a), which shall be binding on all agencies carrying 
on community action program activities with financial assistance 
under this title. He may, where appropriate, estabUsh special or 

25-371 O - 78 - 6 



68 



182 

simplified requirements for smaller agencies or agencies operating in 
rural areas. These special requirements shall not, however, affect the 
applicability of rules governing conflicts of interest, use of position 
or authority for partisan or nonpartisan political purposes or partici- 
pation in direct action, regardless of customary practices or rules 
among agencies in the community. The Director shall consult with 
the heads of other Federal agencies responsible for programs providing 
assistance to activities which may be included in community action 
programs for the purpose of securing maximum consistency between 
rules or regulations prescribed or followed by those agencies and 
those prescribed under this section. 

HOUSING DEVELOPMENT AND SERVICES ORGANIZATIONS 

Sec. 214. Each community action agency shall encourage the 
establishment of housing development and services organizations 
designed to focus on the housing needs of low-income families and 
individuals. Such organizations shall provide the technical, adminis- 
trative, and financial assistance which is required to help low-income 
families and individuals more effectively to utilize existing programs, 
and which is required to enable nonprofit, cooperative, and public 
sponsors more effectively to take advantage of existing Federal, State, 
and local mortgage insurance and housing assistance programs. Where 
appropriate, such organizations may be nonprofit housing develop- 
ment corporations. Such corporations may themselves become sponsors 
of housing under existing programs of specialized housing agencies, 
but under no circumstances shall such corporations insure mortgages 
or duplicate the long-term capital financing functions of programs 
now administered by the specialized housing agencies. Housing de- 
velopment and service organizations shall coordinate their efforts with 
other community action agency efforts so that any programs under- 
taken under authority of this section shall be closely related to other 
community action programs. 

Part B — Financial Assistance to Community Action Programs 
AND Related Activities 

general provisions for financial assistance 

Sec. 221. (a) The Director may provide financial assistance to 
community action agencies for the planning, conduct, administration 
and evaluation of community action programs and components. Those 
components may involve, without limitation, othei activities and sup- 
porting facilities designed to assist participants including the elderly 
poor — 

(1) to secure and retain meaningful employment; 

(2) to attain and adequate education; 

(3) to make better use of available income; 

(4) to provide and maintain adequate housing and a suitable 
living environment; 

(5) to undertake family planning, consistent with personal 
and family goals, religious and moral convictions; 

(6) to obtain services for the prevention of narcotics addiction, 
alcoholism, and the rehabihtation of narcotics addicts and 
alcoholics : 



69 



183 



(7) to obtain emergency assistance through loans or grants 
to meet immediate and urgent individual and family needs, in- 
cluding the need for health services, nutritious food, housing, and 
employment-related assistance ; 

(8) to remove obstacles and solve personal and family problems 
which block the achievement of self-sufficiency; 

(9) to achieve greater participation in the affairs of the com- 
munity ; and 

(10) to make more frequent and effective use of other programs 
related to the purposes of this title. 

He may also provide financial assistance to other public or private 
nonprofit agencies to aid them in planning for the establishment of a 
community action agency. 

(b) If the Director determines that a limited purpose project or 
program involving activities otherwise eligible under this section is 
needed to serve needs of low-income families and individuals in a 
community and no community action agency has been designated for 
that community pursuant to section 210, or where a community action 
agency gives its approval for such a program to be funded directly 
through a public or private nonprofit agency or organization, he may 
extend financial assistance for that project or program to a pubUc or 
private nonprofit agency which he finds is capable of carrying out the 
project in an efficient and effective manner consistent with the purpose 
of this title. 

(c) The Director shall prescribe necessary rules or regulations 
governing applications for assistance under this section to assure 
that every reasonable effort is made by each applicant to secure 
the views of local public officials and agencies in the community having 
a direct or substantial interest in the application and to resolve all 
issues of cooperation and possible duplication prior to its submission, 

(d) After July 1, 1968, the Director shall require, as a condition 
of assistance, that each community action agency has adopted a sys- 
tematic approach to the achievement of the purposes of this title 
and to the utilization of funds provided under this part. Such sys- 
tematic approach shall encompass a planning and implementation 
process which seeks to identify the problems and causes of poverty 
in the community, seeks to mobilize and coordinate relevant public 
and private resources, establishes program priorities, links program 
components with one another and with other relevant programs, and 
provides for evaluation. The Director may, however, extend the time 
for such requirement to take into account the length of time a program 
has been in operation. He shall also take necessary steps to assure 
the participation of other Federal agencies in support of the devel- 
opment and implementation of plans under this subsection. 

(e) In order to promote local responsibility and initiative, the 
Director shall not establish binding national priorities on funds 
authorized by this section, but he shall review each application for 
financial assistance on its merits. Before extending financial assistance 
to a new community action agency under this section, and in deter- 
mining the amount of and conditions on which such assistance shall 
be extended, the Director shall consider the extent and nature of 
poverty in the community and the probable capacity of the agency 
to carry out an effective program. In reviewing or supplementing 
financial assistance to a previously existing community action agency, 



70 



184 

he shall consider the progress made in carrying on programs by such 
agency. 

SPECIAL PROGRAMS AND ASSISTANCE 

Sec. 222. (a) In order to stimulate actions to meet or deal with par- 
ticularly critical needs or problems of the poor which are common 
to a number of communities, the Director may develop and carry on 
special programs under this section. This authority shall be used only 
where tne Director determines that the objectives sought could not be 
effectively achieved through the use of authorities under section 221, 
including assistance to components or projects based on models devel- 
oped and promulgated by him. It shall also be used only with respect 
to programs which (A) mvolve activities which can be incorporated 
into or be closely coordinated with community action programs, (B) 
involve significant new combinations of resources or new and innova- 
tive approaches, or (C) are structured in a way that will, within the 
limits of the type of assistance or activities contemplated, most fully 
and effectively promote the purposes of this title. Subject to such 
conditions as may be appropriate to assure effective and efficient admin- 
istration, the Du'ector may provide financial assistance to public or 
private nonprofit agencies to carry on local projects initiated under 
such special programs; but he shall do so in a manner that will en- 
courage, wherever feasible, the inclusion of the assisted projects in 
community action programs, with a view to minimizing possible dupli- 
cation and promoting efficiencies in the use of common facilities and 
services, better assisting persons or families having a variety of needs, 
and otherwise securing from the funds committed the greatest possible 
impact in promoting family and individual self-sufficiency. Programs 
under this section shall include those described in the following 
paragraphs : 

[Paragraphs (1) through (4) of this subsection have been repealed.] 

(5) A program to be known as ''Community Food and Nutrition" 
designed to provide on an emergency basis, directly or by delegation 
of authority pursuant to the provisions of title VI of this Act, finan- 
cial assistance for the provision of such supplies and services, nutri- 
tional foodstuffs, and related services, as may be necessary to counter- 
act conditions of starvation or malnutrition among the poor. Such 
assistance may be provided by way of supplement to such other 
assistance as may be extended under the provisions of other Federal 
programs, and may be used to extend and broaden such programs to 
serve economically disadvantaged individuals and families where 
such services are not now provided and without regard to require- 
ments of such laws for local or State administration or financial 
participation. In extending such assistance, the Director may make 
grants to community action agencies or local public or private non- 
profit organizations or agencies to carry out the purposes of this para- 
graph. The Director is authorized to carry out the functions under 
this paragraph through the Secretary of Agriculture and the Secre- 
tary of Health, Education, and Welfare in a manner that will insure 
the availability of such supplies and services, nutritional foodstuffs, 
and related services through a community action agency where 



71 



1S5 

feasible, or other agencies or organizations if no such agency exists or 
is able to administer programs to provide such foodstuffs, services, 
and supplies to needy individuals and families. 

[Paragraph (6) repealed.) 

(7) A program to be known as "Senior Opportunities and Serv- 
ices" designed to identify and meet the needs of older, poor per- 
sons above the age of 60 in one or more of the following areas: de- 
velopment and provision of new employment and volunteer services; 
effective referral to existing health, welfare, employment, hou&ing, 
legal, consumer, transportation, education, and recreational and other 
services ; stimulation and creation of additional services and programs 
to remedy gaps and deficiencies in presently existing services and 
programs; modification of existing procedures, eUgibiUty require- 
ments and program structures to facilitate the greater use of, and 
participation in, pubhc services by the older poor; development of 
all-season recreation and service centers controlled by older persons 
themselves, and such other activities and services as the Director 
may determine are necessary or specially appropriate to meet the 
needs of the older poor and to assure them greater self-sufficiencjr. 
In administering this program the Director shall utilize to the maxi- 
mum extent feasible the services of the Administration of Aging in 
accordance with agreements with the Secretary of Health, Education, 
and Welfare. 

[Paragraphs] (8) and (9) repealed. 

(10) An ''Environmental Action" program through which low- 
income persons will be paid for work (which would not otherwise 
be performed) on projects designed to combat pollution or to im- 
prove the environment. Projects may include, without limitation: 
cleanup and sanitation activities, including solid waste removal; 
reclamation and rehabilitation of eroded or ecologically damaged 
areas, including areas affected by strip mining; conservation and 
beaatification activities, including tree planting and recreation 
area development; the restoration and maintenance of the environ- 
ment; and the improvement of the quality of life in urban and rural 
areas. 

(11) A program to be known as "Rural Housing Development 
and Rehabihtation" designed to assist low-income families in rural 
areas to construct and acquire ownership of adequate housing, to 
rehabilitate or repair existing substandard units in such areas, and 
to otherwise assist families in obtaining standard housing. Financial 
assistance under this paragraph shall be provided to non-profit 
rural housing development corporations and cooperatives serving 
areas which are defined by the Farmers Home Administration as rural 
areas, and shall be used for, but not limited to, such purposes as ad- 
ministrative expenses; revolving development funds; non-revolving 
land, land development and construction writedowns; rehabilitation 
or repair of substandard housing; and loans to low-income families. 
In the construction, rehabihtation, and repair of housing for low- 
income famihes under this paragraph, the services of persons enrolled 
in Mainstream programs may be utiHzed. Loans under this paragraph 
may be used for, but not limited to, such purposes as the purchase 
of new housing units, the repair, rehabihtation and purchase of 
existing units, and to supplement existing Federal loan programs 
in order that low-income families may benefit from them. The re- 



72 



186 



Sayment period of such loans shall not exceed thirty-three years. 
[o loans under this paragraph shall bear an interest rate of less 
than 1 per centum per annum, but if the Director, after having 
examined the family income of the applicant, the projected housing 
costs of the applicant, and such other factors as he deems appropriate, 
determines that the applicant would otherwise be unable to partici- 
pate in this program, he may waive the interest in whole or m part 
and for such periods of time as he may establish except that (1) no 
such waiver may be granted to an applicant whose adjusted family 
income (as defined by the Farmers Home Administration) is in excess 
of $3,700 per annum and (2) any applicant for whom such a waiver is 
provided shall be required to commit at least 20 per centum of his 
adjusted family income toward the mortgage debt service and other 
housing costs. Family incomes shall be recertified annually, and 
monthly payments for all loans under this paragraph adjusted 
accordingly. 

(12) A program to be known as "Emergency Energy Conservation 
Services" designed to enable low-income individuals and families, 
including the elderly and the near poor, to participate in energy 
conservation programs designed to lessen the impact of the hi^h cost 
of energy on such individuals and families and to reduce individual 
and family energy consumption. The Director is authorized to pro- 
vide financial and other assistance for programs and activities, in- 
cluding, but not limited to, an energy conservation and education 
program; winterization of old or substandard dwellings, improved 
space conditioniiig, and insulation; emergency loans, grants, and 
revolving funds to install energy conservation technologies and to deal 
with increased housing expenses relating to the energy crisis; alterna- 
tive fuel supplies, special luel voucher or stamp programs; alternative 
transportation activities designed to save fuel and assure continued 
access to training, education, and employment-; appropriate out- 
reach efforts; furnishing personnel to act as coordinators, providing 
legal or technical assistance, or otherwise representing the interests of 
the poor in efforts relating to the energy crisis; nutrition, health, and 
other supportive services in emergency cases; and evaluation of 
programs and activities under this paragraph. Such assistance may be 
provided as a supplement to any other assistance extended under the 
provisions of this Act or under other provisions of Federal law. The 
Director, after consultation with the Administrator of the Federal 
Energy Office and appropriate Federal departments and agencies, shall 
establish procedures and take other appropriate action necessary to 
insure that the effects of the energy crisis on low-income persons, the 
elderly, and the near poor are taken into account in the formulation 
and administration of programs relating to the energy crisis. 

(13) A program to be known as "Summer Youth Recreation" 
designed to provide recreational opportunities for low-income children 
during the summer months. Funds made available for this section 
shall be allocated by the Director, after consultation with the Secre- 
tary of Labor, among prime sponsors and other agencies designated 
under title I of the Comprehensive Employment and Training Act 
of 1973 on the basis of (1) the relative number of public assistance 
recipients in the area served by such prime sponsor or agency, as 
compared to the Nation; (2) the relative number of unemployment 
persons in such area as compared with the Nation; and (3) the relative 
number of related children living with families with incomes below 



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1S7 

the poverty line in such area, as compared to the Nation. That part 
of any allotment which the Director determines will not be needed 
may be reallotted, at such dates during the fiscal year as the Director 
may fix, to the extent feasible, in proportion to the original allotments. 
In making allocations under this section, the Director shall insure, 
to the maximum extent possible, that for the program commencing 
in the fiscal year ending June 30, 1975, and for the program in each 
succeeding fiscal year no prime sponsor or other designated agency 
shall receive an amount less than the amount received for such 
programs during the fiscal year ending June 30, 1973, or the fiscal 
year ending June 30, 1974, whichever is higher. 

(b) Consistent with, and subject to, the provisions of sections 230 
and 232 (a), (b), and (c), programs under this section may include 
related training, research, and technical assistance, and funds allocated 
for this purpose may be allotted and used in the manner otherwise 
provided under this title with respect to training, research, and tech- 
nical assistance activities. 

RESIDENT EMPLOYMENT 

Sec. 223. In the conduct of all component programs under this part, 
residents of the area and members of the groups served shall be pro- 
vided maximum employment opportunity, including opportunity for 
further occupational training and career advancement. The Director 
shall encourage the employment of persons fifty-five years and older 
as regular, part-time and short-term staff in component programs. 

neighborhood centers 

Sec. 224. The Director shall encourage the development of neigh- 
borhood centers, designed to promote the effectiveness of needed serv- 
ices in such fields as health, education, manpower, consumer protec- 
tion, child and economic development, housing, legal, recreation, and 
social services, and so organized (through a corporate or other appro- 
priate framework) as to promote maximum participation of neighbor- 
hood residents in center planning, policymaking, administration, and 
operation. In addition to providing such services as may not otherwise 
be conveniently or readily available, such centers shall be responsive 
to such neighborhood needs, such as counseling, referral, follow- 
through, and community development activities, as may be necessary 
or appropriate to best assure a system under which existing programs 
are extended to the most disadvantaged, are linked to one another, are 
responsive and relevant to the range of community, family, and indi- 
vidual problems and are fully adapted to neighborhood needs and 
conditions. 

allotment of funds: limitations on assistance 

Sec. 225. (a) Of the sums which are appropriated or allocated for 
assistance in the development and implementation of community ac- 
tion programs pursuant to section 221, and for special program proj- 
ects referred to in section 222(a), and which are not subject to any 
other provision governing allotment or distribution, the Director 
shall allot not more than 2 per centum among Guam, American 
Samoa, the Trust Territory of the Pacific Islands, and the Virgin 
Islands, according to their respective needs. He shall also reserve not 



74 



188 



more than 20 per centum of those sums for allotment in accordance 
with such criteria and procedures as he may prescribe. The remainder 
shall be allotted among the States, in accordance with the latest avail- 
able data, so that equal proportions are distributed on the basis of (1) 
the relative number of public assistance recipients in each State as 
compared to all States, (2) the relative number of unemployed persons 
in each State as compared to all States, and (3) the relative number 
of related children living with families with incomes below the poverty 
line in each State as compared to all States. For purposes of tnis sub- 
section, the Director shall utilize the criteria of poverty used by the 
Bureau of the Census in compiling the 1970 decennial census. The 
Director shall insure that for the fiscal year ending June 30, 1975, and 
for each succeeding fiscal year, no State shall be allotted for programs 
under section 221 and section 222(a) an amount which is less than the 
amount received for use within such State for programs described in 
such sections during the fiscal year ending June 30, 1974. That part 
of any State's allotment which the Director determines will not be 
needed may be reallotted, at such dates during the fiscal year as the 
Director may fix, in proportion to the original allotments, but with 
appropriate adjustments to assure that any amount so made available 
to any State in excess of its needs is similarly reallotted among the 
other States, 

(b) The Director may provide for the separate allotment of funds 
for any special program referred to in section 222(a). This allotment 
may be made in accordance with the cirteria prescribed in subsection 
(a), or it may be made in accordance with other criteria which he 
determines will assure an equitable distribution of funds reflecting 
the relative incidence in each State of the needs or problems at which 
the program is directed, except that in no event may more than 12'^ 
per centum of the funds for any one program be used in any one State. 

(c) Unless otherwise provided in this part, financial assistance ex- 
tended to a community action agency or other agency pursuant to sec- 
tions 221 and 222(a), for the period ending June 30, 1967 shall not 
exceed 80 per centum of the approved cost of the assisted programs or 
activities with respect to fiscal year 1975, and 70 per centum of such 
costs with respect to fiscal year 1976, and shall not exceed 60 per cen- 
tum of such costs with respect to fiscal year 1977, except that in the 
case of community action agencies receiving such financial assistance 
annually of $300,000 or less, such financial assistance shall not exceed 
75 per centum of such costs with respect to fiscal year 1976, and shall 
not exceed 70 per centum of such costs with respect to fiscal year 1977. 
The Director may, however, approve assistance in excess of such per- 
centages if he determines, in accordance with regulations establishing 
objective criteria, that such action is required in furtherance of the 
purposes of this title. Non-Federal contributions may be in cash or 
m kmd, fairly evaluated, including but not limited to plant, equipment 
or services. The Director shall not require non-Federal contributions 
in excess of the amount required to meet the approved cost 
of assisted programs or activities after calculating the per centuna of 
Federal assistance for which such program is eligible under the first 
sentence of this subsection. In addition, the Director may approve 
assistance in excess c^ such per centum upon evidence that the aggre- 
gate of all non-Federal contributions by agencies within a State for 
financial assistance provided pursuant to sections 221 and 222(a) as a 
per centum of the aggregate of all financial assistance provided to such 



75 



189 



agencies in such State pursuant to such sections meets the per centum 
requirements of this subsection. 

(d) No program shall be approved for assistance under sections 
221 and 222(a) unless the Director satisfies himself (1) that the serv- 
ices to be provided under such program will be in addition to, and 
not in substitution for, services previously provided without Federal 
assistance, and (2) that funds or other resources devoted to programs 
designed to meet the needs of the poor within the community will not 
be diminished in order to provide any contributions required under 
subsection (c). The requirement imposed by the preceding sentence 
shall be subject to such regulations as the Director may adopt and 
promulgate estabUshing objective criteria for determinations covering 
situations where a strict apphcation of that requirement would result 
in unnecessary hardship or otherwise be inconsistent with the purpose 
sought to be achieved. 

DESIGN AND PLANNING ASSISTANCE PROGRAMS 

Sec. 226. (a) The Director shall make grants or enter into contracts 
to provide financial assistance for the operating expenses of programs 
conducted by community-based design and planning organizations to 
provide technical assistance and professional architectural and related 
services relating to housing, neighborhood facilities, transportation 
and other aspects of community planning and development to persons 
and community organizations or groups not otherwise able to afford 
such assistance. Such programs shall be conducted with maximum use 
of the voluntary services of professional and community personnel. In 
providing assistance under this section, the Director shall afford 
priority to persons in urban or rural poverty areas with substandard 
housing, substandard pubhc service facilities, and generally bhghted 
conditions. Design and planning services to be provided by such or- 
ganization shall include — 

(1) comprehensive community or area planning and develop- 
ment; _ 

(2) specific projects for the priority planning and development 
needs of the coromunity; and 

(3) educational programs directed to local residents emphasizing 
their role in the planning and development process in the com- 
munity. 

(b) No assistance may be provided under this section unless such 
design and planning organization — 

(1) is a nonprofit organization located in the neighborhood 
or area to be served with a majority of the governing body of such 
organization comprised of residents of that neighborhood or 
area; 

(2) has a primary function the goal of bringing about, through 
the involvement of the appropriate community action agency or 
otherwise, maximum possible participation of local residents, 
especially low-income residents, in the planning and decision- 
making regarding the development of their community; and 

(3) will carry out its design and planning services principally 
through the voluntary participation of professional and com- 
munity personnel (including, where available, VISTA volunteers) . 

(c) Design and planning organizations receiving assistance under 
this section shall not subcontract with any profitmaking organization 
or pay fees for architectural or other professional services. 



76 



190 

(d) The Director is authorized to make whatever arrangements are 
necessary to continue pilot or demonstration projects of demonstrated 
effectiveness of the type described in this section receiving assistance 
under section 232 of this Act during the fiscal year ending June 30, 
1971. 

NATIONAL YOUTH SPORTS PROGRAM 

Sec. 227. (a) In order to provide to disadvantaged national youth 
physical fitness instruction and competition with high-quality 
faciUties and supervision and related educational and counseling 
services (including instruction concerning study practices, career 
opportunities, job responsibilities, health and nutrition, and drug 
abuse education) through regular association with college instructors 
and athletes and exposure to college and university campuses and 
other recreational facilities, the Director shall make grants or enter 
into contracts for the conduct of an annual national youth sports 
program concentrated in the summer months and with continued 
activities throughout the year, so as to offer disadvantaged youth 
living in areas of rural and urban poverty an opportunity to receive 
such recreation and educational instruction, information, and services 
and to participate in such physical fitness programs and sports 
competitions. 

(b) No assistance may be provided under this section unless satis- 
factory assurances are received that (1) not less than 90 per centum 
of the youths participating in each program to be assisted under this 
section are from families with incomes below the poverty level as 
determined by the Director, and that such participating youths and 
other neighborhood residents, through the involvement of the appro- 
priate community action agency or otherwise, will have maximum 
participation in program planning and operation and (2) all signifi- 
cant segments of the low-income population of the community to be 
served will be served on an equitable basis in terms of participating 
youths and instructional and other support personnel. 

(c) Programs under this section shall be administered by the Direc- 
tor through grants or contracts with any qualified organization of 
colleges and universities or such other qualified nonprofit organiza- 
tions active in the field with access to appropriate recreational facili- 
ties as the Director shall determine in accordance with regulations 
which he shall prescribe. Each such grant or contract and subcontract 
with participating institutions of higher education or other qualified 
organizations active in the field shall contain provisions to assure that 
the prograrn to be assisted will provide a non-Federal contribution 
(in cash or in- kind) of no less than 20 per centum of the direct costs 
necessary to carry out the program. Each such grant, contract, or 
subcontract shall include provisions for — 

(1) providing opportunities for disadvantaged youth to en- 
gage in competitive sports and receive sports skills and physical 
fitness instruction and education in good health and nutrition 
practices ; 

(2) providing such youth with instruction and information 
regarding study practices, career opportunities, job responsibili- 
ties, and drug abuse; 

(3) carrying out continuing related activities throughout the 
year; 



77 



191 

(4) meeting the requirements of subsection (b) of this section; 

(5) enabling the contractor and institutions of higher educa- 
tion or other quahfied organizations active in the field located 
conveniently to such areas of poverty and the students and per- 
sonnel of such institutions or organizations active in the field to 
participate more fully in the community life and in solutions of 
community problems; and 

(6) serving metropolitan centers of the United States and 
rural areas, within the limits of program resources. 

CONSUMER ACTION AND COOPERATIVE PROGRAMS 

Sec. 228. (a) The Director shall make grants or enter into contracts 
to provide financial assistance for the development, technical assist- 
ance to and conduct of consumer action and advocacy and cooperative 
programs, credit resources development programs, and consumer pro- 
tection and education programs designed to demonstrate various tech- 
niques and models and to carry out projects to assist and provide 
technical assistance to low-income persons to try to improve the 
quality, improve the delivery, and lower the price of goods and serv- 
ices, to obtain, without undue delay or burden, financial credit at rea- 
sonable cost, and to develop means of enforcing consumer rights, 
developing consumer grievance procedures and presenting consumer 
grievances, submitting consumer views and concerns for protection 
against unfair, deceptive, or discriminatory trade and commercial 
practices and educating low-income persons with respect to such rights, 
procedures, grievances, views and concerns. 

(b) No assistance may be provided under this section unless the 
grantee or contracting organization or agency is a nonprofit organiza- 
tion and has as a primary function the goal of bringing about, through 
the involvement of the appropriate community action agency or other- 
wise, maximum possible participation of low-income persons in the 
project, 

(c) The Director is authorized to make whatever arrangements are 
necessary to continue pilot or demonstration projects of demonstrated 
effectiveness, or which have not yet been evaluated until such time as 
an evaluation is conducted and the effectiveness determined and to 
carry out evaluations of such projects, of the tvpe described in this 
section receiving assistance under section 232 oi this Act during the 
fiscal year ending June 30, 1971 or June 30, 1972. 

Part C — Supplemental Programs and Activities 

technical assistance and training 

Sec. 230. The Director may provide, directly or through grants 
or other arrangements, (1) technical assistance to communities in 
developing, conducting, and administering programs under this title, 
and (2) training for specialized or other personnel which is needed in 
connection with those programs or which otherwise pertains to the 
purposes of this title. Upon request of an agency receiving financial 
assistance under this title, the Director may make special assignments 
of personnel to the agency to assist and advise it in the performance of 
functions related to the assisted activity; but no such special assign- 



78 



192 

ment shall be for a period of more than two years in the case of any 
agency. 

STATE AGENCY ASSISTANCE 

Sec. 231. (a) The Director may provide financial assistance to State 
agencies designated in accordance with State law, to enable those 
agencies — 

(1) to provide technical assistance to communities and local 
agencies in developing and carrying out programs under this 
title; 

(2) to assist in coordinating State activities related to this title ; 

(3) to advise and assist the Director in developing procedures 
and programs to promote the participation of States and State 
agencies in programs under this title; and 

(4) to advise and assist the Director, the Economic Oppor- 
tunity Council established by section 631 of the Act, and the heads 
of other Federal agencies in identifying problems posed by Fed- 
eral statutory or administrative requirements that operate to im- 
pede State level coordination of programs related to this title, 
and in developing methods or recommendations for overcoming 
those problems. 

(b) In any grants or contracts with State agencies, the Director 
shall give preference to programs or activities which are administered 
or coordinated by the agencies designated pursuant to subsection (a) , 
or which have been developed and will be carried on with the assistance 
of those agencies. 

(c) In order to promote coordination in the use of funds under 
this Act and funds provided or granted by State agencies, the Director 
may enter into agreements with States or State agencies pursuant to 
which they will act as agents of the United States for purposes of pro- 
viding financial assistance to community action agencies or other local 
agencies in connection with specific projects or programs involving 
the common or joint use of State funds and funds under this title. 

(d) If any member of a board to which section 211(b) is applica- 
ble files an allegation with the Director that an agency receiving 
assistance under this section is not observing any requirement of 
this Act, or any regulation, rule, or guideline promulgated by the 
Director under this Act, the Director shall promptly investigate 
such allegation and shall consider it; and, if after such investigation 
and consideration he finds reasonable cause to believe that the al- 
legations are true, he shall hold a hearing, upon the conclusion of 
which he shaU notify all interested persons of his findings. If he 
finds that the allegations are true, and that, after being afforded a 
reasonable opportunity to do so, the agency has failed to make appro- 
priate corrections, he shall forthwith terminate further assistance 
under this title to such agency until he has received assurances satis- 
factory to him that further violations will not occur. 

RESEARCH AND PILOT PROGRAMS 

Sec. 232. (a) The Director may contract or provide financial as- 
sistance for pilot or demonstration projects conducted by public or 
private agencies which are designed to test or assist in the develop- 
ment of new approaches or methods that will aid in overcoming special 



79 



193 



problems or otherwise in furthering the purposes of this title. He 
may also contract or provide financial assistance for research per- 
taining to the purposes of this title. 

(b) The Director shall establish an overall plan to govern the ap- 
proval of pilot or demonstration projects and the use of all research 
authority under this title. The plan shall set forth specific objectives 
to be achieved and priorities among such objectives. In formulating 
the plan, the Director shall consult with other Federal agencies for 
the purpose of minimizing duplication among similar activities or 
projects and determining whether the findings resulting from any 
research or pilot projects may be incorporated into one or more pro- 
grams for which those agencies are responsible. As part of the annual 
report required by section 608, or in a separate annual report, the 
Director shall submit a description for each fiscal year of the current 
plan required by this section, of activities subject to the plan, and of 
the findings derived from those activities, together with a statement 
indicating the time and, to the extent feasible, the manner in which 
the benefits of those activities and findings are expected to be realized. 

(c) Not more than 15 per centum of the sums appropriated or al- 
located in any fiscal year for this title shall be used for the purposes 
of this section. One-third of the sums so appropriated or allocated 
shall be available only for projects authorized under subsection (f) 
of this section. 

(d) No pilot or demonstration project under this section shall be 
commenced in any city, county, or other major political subdivision, 
unless a plan setting forth such proposed pilot or demonstration proj- 
ect has been submitted to the appropriate community action agency, 
or, if there is no such agency, to the local governing officials of the 
political subdivision, and such plan has not been disapproved by the 
community action agency or governing body, as the case may be, 
within thirty days of such submission, or, if so disapproved, has 
been reconsidered by the Director and found by him to be fully consist- 
ent with the provisions and in furtherance of the purposes of this title. 

(e) The Director shall develop and carry out pilot projects which 
(1) aid elderly persons to achieve greater self-sufficiency, (2) focus 
upon the problems of rural poverty, (3) are designed to develop new 
techniques and community-based efforts to prevent narcotics addiction 
or to rehabilitate narcotic addicts, or (4) are designed to encourage 
the participation of private organizations, other than nonprofit orga- 
nizations, in programs under this title. 

(f) The Du-ector shall conduct, either directly or through grants 
or other arrangements, research and pilot projects designed to assure 
a more effective use of human and natural resources of rural America 
and to slow the migration from rural areas due to lack of economic 
opportunity, thereby reducing population pressures in urban centers. 
Such projects may be operated jointly or in cooperation with other 
federally assisted programs, particularly programs authorized under 
the Public Works and Economic Development Act of 1965, in the 
area to be served by the project. 



SPECIAL ASSISTANCE 



Sec. 234. The Director may provide financial assistance for projects 
conducted by public or private nonprofit agencies which are designed 



80 



194 

to serve groups of low-income individuals who are not being effectively 
served by other programs under this title. In administering this 
section, the Director shall give special consideration to programs 
designed to assist older persons and other low-income individuals 
who do not reside in low-income areas and who are not being effectively 
served by other programs under this title. 

DEMONSTRATION COMMUNITY PARTNERSHIP AGREEMENTS 

Sec. 235. (a) The Director may provide financial assistance from 
funds appropriated to carry out this section to community action 
agencies or pubUc or private nonprofit agencies designated under 
section 210 for programs authorized under this title, and to State 
economic opportunity offices for programs and activities authorized 
under section 231(a). Financial assistance extended to a community 
action agency or other agency pursuant to this section may be used 
for new programs or to supplement existing programs and shall not 
exceed 50 per centum of the cost of such new or supplemental 
programs. 

(b) Matching local and State funds supplied under this section 
shall be in cash and shall represent State and local initiatives newly 
obligated within the previous year to the purposes of the grant-sup- 
ported activity; and no program shall be approved for assistance 
under this section unless the Director satisfies himself (1) that the 
activities to be carried out under such program will be in addition to, 
and not in substitution for, activities previously carried on without 
Federal assistance, (2) that funds or other resources devoted to pro- 
grams designed to meet the needs of the poor within the community, 
area, or State will not be diminished in order to provide the contribu- 
tions required under this section. The requirement imposed by the 
preceding sentence shall be subject to such regulations as the Direc- 
tor may adopt and promulgate establishing objective criteria for 
determinations covering situations where a strict application of that 
requirement would result in unnecessary hardship or otherwise be 
inconsistent with the purposes sought to be achieved. 

(c) The provisions of section 242 of this Act shall not apply to 
assistance provided under this section. 

INTERGOVERNMENTAL ADVISORY COUNCIL ON COMMUNITY SERVICES 

Sec. 236. (a) There shall be established with'n the Community 
Services Administration an Intergovernmental Advisory Council on 
Community Services (referred to in this section as the "Council"). 

(b) The Council shall be composed of nine members who shall be 
appointed by the President as follows: 

(i) Three members shall be appointed from among representa- 
tives of States and county and municipal governments or orga- 
nizations which represent such governmental units, selected on 
an equitable, political, and geographic basis after considering rec- 
ommendations made by the National Governors' Conference, the 
National Leagure of Cities-United States Conference of Mayors, 
the National Association of Counties and similar organizations 
representative of State and local government. 



81 



195 

(ii) Three members shall be appointed from among representa- 
tives of community action agencies and other grantees under this 
Act or organizations which represent such agencies and grantees, 
selected on an equitable, political, and geographic basis after con- 
sidering recommendations previously made by the Director of the 
Community Services Administration. 

(iii) Three members shall be appointed from among represen- 
tatives of labor, management, and other sectors which have dem- 
onstrated active interest in community action and antipoverty 
programs. 

(c) The Council shall— 

(1) encourage the formation of community partnership agree- 
ments; 

(2) review the substance of such agreements and any regula- 
tions, guidelines, or other program criteria with respect thereto 
and advise the Director thereon prior to final approval thereof; 

(3) evaluate the effectiveness of such agreements in meeting the 
purposes of this Act; 

(4) conduct a continuing survey throughout the Nation on the 
extent to which, and terms under which, public and private 
resources have been and may be available for antipoverty efforts ; 

(5) identify and encourage means of increasing resources avail- 
able for such activities; and 

(6) submit annual reports to the President and to the Congress 
on or before March 1, 1976, and March 1, 1977, with respect to its 
activities and findings, together with such recommendations for 
legislation as it may deem appropriate. 

(d) The Director shall provide the Council with such information 
as shall be necessary for the Council to discharge its functions under 
this section and shall furnish the Council with copies of all grant appli- 
cations within ten days of receipt thereof. 

FUNDS AVAILABLE 

Sec. 237. There is also authorized to be appropriated not to exceed 
$50,000,000 to carry out section 235 during the fiscal year 1975, and 
such sums as may be necessary during each of the two succeeding 
fiscal years, except that in no event may more than 12}^ per centum 
of such additional amounts be used in any one State. 

Part D — General and Technical Provisions 

ASSISTANT directors FOR COMMUNITY ACTION 

Sec. 240. The Director shall appoint two assistant directors for the 
purpose of assisting the Director in the administration of the pro- 
visions of this title. One such assistant director, to be known as the 
Assistant Director for Community Action in Rural Areas, shall be 
responsible for assuring that funds allotted for assistance to programs 
or projects designed to assist the rural poor are so expended. The other 
assistant director to be known as the Assistant Director for Commu- 
nity Action in Urban Areas, shall be responsible for assuring that 
funds allotted for assistance to programs or projects designed to assist 
the urban poor are so expended. Each assistant director shall have such 
additional responsibilities consistent witli the foregoing responsibilities 
as the Director may hereafter assign. 



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196 

RURAL AREAS 

Sec. 241. (a) In exercising authority under this title, the Director 
shall take necessary steps to further the extension of benefits to resi- 
dents of rural areas, consistent with the extent and severity of poverty 
among rural residents, and to encourage high levels of managerial and 
technical competence in programs undertaken in rural areas. These 
steps shall include, to the maximum extent practicable, (1) the devel- 
opment under section 222(a) of programs particularly responsive to 
special needs of rural areas; (2) the establishment, pursuant to 
section 232, of a program of research and pilot project activities 
specifically focused upon the problems of rural poverty; (3) the provi- 
sion of technical assistance so as to afford a priority to agencies in 
rural communities and to aid those agencies, through such arrange- 
ments as may be appropriate, in securing assistance under Federal 
programs which are related to this title but which are not generally 
utilized in rural areas; and (4) the development of special or simpli- 
fied procedures, forms, guidelines, model components, and model 
programs for use in rural areas. 

(b) The Director shall estabUsh criteria designed to achieve an 
equitable distribution of assistance under this title within the States 
between urban and rural areas. In developing such criteria, he shall 
consider the relative number in the States or areas therein of: (1) 
low-income famihes, particularly those with children; (2) unemployed 
persons; (3) persons receiving cash or other assistance on a needs basis 
from public agencies or private organizations; (4) school dropouts; 
(5) adults with less than an eighth-grade education; (6) person re- 
jected for miUtary service; and (7) poor persons living in urban 

E laces compared to the number living in rural places as determined 
y the latest reports of the Bureau of the Census. 

(c) Notwithstanding anv other provision of this title, the Director 
is authorized to provide financial assistance in rural areas to pubUc 
or private nonprofit agencies for any project for which assistance to 
community action agencies is authorized, if he determines that it is not 
feasible to establish a community action agency within a reasonable 
period of time. The assistance so granted shall be subject to such condi- 
tions as the Director deems appropriate to promote adherence to the 
purposes of this title and the early estabhshment of a community 
action agency in the area. 

(d) The Director shall encourage the development of programs 
for the interchange of personnel, for the undertaking of common or 
related projects, and other methods of cooperation between urban 
and rural communities, with particular emphasis on fostering co- 
operation in situations where it may contribute to new employment 
opportunities, and between larger urban communities with concentra- 
tions of low-income persons and families and rural areas in which 
substantial numbers of those persons and families have recently 
resided. 

SUBMISSION OF PLANS TO GOVERNORS 

Sec. 242. In carrying out the provisions of this title, no contract, 
agreement, grant, loan, or other assistance shall be made with, or pro- 
vided to, any State or local public agency or any private institution 
or organization for the purpose of carrying out any program, project, 
or other activity within a State unless a plan setting forth such pro- 
posed contract, agreement, grant, loan, or other assistance has been 



83 



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submitted to the Governor of the State, and such plan has not been 
disapproved by the Governor within thirty days of such submission, 
or, if so disapproved, has been reconsidered by the Director and found 
i by him to be fully consistent with the provisions and in furtherance 
of the purposes of this title. Funds to cover the costs of the proposed 
contract, agreement, grant, loan, or other assistance shall be obUgated 
from the appropriation which is current at the time the plan is sub- 
mitted to the Governor. This section shall not, however, apply to con- 
tracts, agreements, grants, loans or other assistance to any institution 
of higher education in existence on the date of the approval of this 
Act. 

FISCAL RESPONSIBILITY AND AUDIT 

Sec. 243. (a) No funds shall be released to any agency receiving 
financial assistance under this title until it has submitted to the Di- 
rector a statement certifying that the assisted agency and its delegate 
agencies (or subcontractors for performance of any major portion 
of the assisted program) have established an accounting system with 
internal controls adequate to safeguard their assets, check the accuracy 
and reliability of the accounting data, promote operating efficiency 
and encourage compliance with prescribed management policies and 
such additional fiscal responsibility and accounting requirements as 
the Director may establish. The statement may be furnished by a 
certified public accountant, a duly licensed public accountant or, 
in the case of a public agency, the appropriate public financial officer 
who accepts responsibility for providing required financial services to 
that agency. 

(b) Within three months after the effective date of a grant to or 
contract of assistance with an organization or agency, the Director 
shall make or cause to be made a preliminary audit survey to review 
and evaluate the adequacy of the accounting system and internal con- 
trols established thereunder to meet the standards set forth in the 
statement referred to in subsection (a) . Promptly after the completion 
of the survey, the Director shall determine on the basis of findings and 
conclusions resulting from the survey whether the accounting systems 
and internal controls meet those standards and, if not, whether to sus- 
pend the grant or contract. In the event of suspension, the assisted 
agency shall be given not more than six months within which to estab- 
lish the necessary systems and controls, and, in the event of failure to 
do so within such time period, the assistance shall be terminated by the 
Director. 

(c) At least once annually the Director shall make or cause to be 
made an audit of each grant or contract of assistance under this title. 
Promptly after the completion of such audit, he shall determine on 
the basis of resulting findings and conclusions whether any of the 
costs of expenditures incurred shall be disallowed. In the event of 
disallowance, the Director may seek recovery of the sums involved by 
appropriate means, including court action or a commensurate increase 
in the required non-Federal share of the costs of any grant or contract 
with the same agency or organization which is then in effect or which 
is entered into within twelve months after the date of disallowance. 

(d) The Director shall establish such other requirements and take 
such actions as he may deem necessary and appropriate to carry out 
the provisions of this section and to insure fiscal responsibility and 



84 



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accountability, and the effective and efficient handling of funds ii 
connection with programs assisted under this title. These requirements 
and actions shall include (1) necessary action to assure that the rate, 
of expenditure of any agency receiving financial assistance does noi 
exceed the rate contemplated under its approved program; and (2] 
appropriate requirements to promote the continuity and coordinatior 
of all projects or components of programs receiving financial assistance 
under this title, including provision for the periodic reprograming and 
supplementation of assistance previously provided. 

SPECIAL LIMITATIONS 

Sec. 244. The following special limitations shall apply, as indicated 
to programs under this title. 

(1) Financial assistance under this title may include funds to 
provide a reasonable allowance for attendance at meetings of anj 
community action agency governing board, neighborhood council 
or committee, as appropriate to assure and encourage the maxi- 
mum feasible participation of members of groups and residents 
of areas served in accordance with the purposes of this title, and 
to provide reimbursement of actual expenses connected with those 
meetings; but those funds (or matching non-Federal funds) ma> 
not be used to pay allowances in the case of any individual who is 
a Federal, State, or local government employee, or an employee 
of a communitv action agency, or for payment of an allowance tc 
any individual for attendance at more than two meetings a 
month. 

(2) The Director shall issue necessary rules or regulations tc 
assure that no employee engaged in carrying out communit}; 
action program activities receiving financial assistance under this 
title is compensated from funds so provided at a rate in excess ol 
$15,000 per annum, and that any amount paid to such an employee 
at a rate in excess of $15,000 per annum shall not be considered in 
determining whether the non-Federal contributions requirements 
of section 225(c) have been complied with; the Director may, 
however, provide in those rules or regulations for exceptions 
covering cases (particularly in large metropolitan areas) where, 
because of the need for specialized or professional skills or pre- 
vailing local salary levels, application of the foregoing restriction 
would greatly impair program effectiveness or otherwise be in- 
consistent with the purposes sought to be achieved. 

(3) No officer or employee of the Office of Economic Oppor- 
tunity^ shall serve as member of a board, council, or committee oi 
any agency serving as grantee, contractor, or delegate agency in 
connection with a program receiving financial assistance undei 
this title ; but this shall not prohibit an officer or employee from 
serving on a board, council, or committee which does not have 
any authority or powers in connection with a program assisted 
under this title. 

(4) In granting financial assistance for projects or activities 
in the field of family planning, the Director shall assure that 
family planning services, including the dissemination of family 
planning information and medical assistance and supplies, are 
made available to all low-income individuals who meet the cri- 

1 Should read "Community Services Administration". 



85 



199 

teria for eligibility for assistance under this title which have been 
established by the assisted agency and who desire such informa- 
tion, assistance, or supplies. The Director shall require, in con- 
nection with any such financial assistance, that — 

(A) no individual will be provided with any information, 
medical supervision, or suppHes which that individual indi- 
cates are inconsistent with his or her moral, philosophical, or 
religious beliefs; and 

(B) no individual will be provided with any medical super- 
vision or supplies unless he or she has voluntarily requested 
such medical supervision or supplies. 

The use of family planning services assisted under this title shall 
not be a prerequisite to the receipt of services from or par- 
ticipation m any other programs under this Act. 

(5) No financial assistance shall be extended under this title 
to provide general aid to elementary or secondary education in 
any school or school system ; but this shall not prohibit the provi- 
sion of special, remedial, and other noncurricular educational 
assistance. 

(6) In extending assistance under this title the Director shall 
give special consideration to programs which make maximum use 
of existing schools, community centers, settlement houses, and 
other facilities during times they are not in use for their primary 
purpose. 

(7) No financial assistance shall be extended under this title 
in any case in which the Director determines that the costs of 
developing and administering all of the programs assisted under 
this title carried on by or under the supervision of any community 
action agency exceed 15 per centum of the total costs, including 
non-Federal contributions to such costs, of such programs. The 
Director, after consultation with the Director of the Bureau of 
the Budget,^ shall establish by regulation, criteria for determining 
(i) the costs of developing and administering such programs, and 
(ii) the total costs of such programs. In any case in which the 
Director determines that the cost of administering such programs 
does not exceed 15 per centum of such total costs but is, in his 
judgment, excessive, he shall forthwith require such community 
action agency to take such steps prescribed by him as will elimi- 
nate such excessive administrative cost, including the sharing by 
one or more such community action agencies of a common 
director and other administrative personnel. The Director may 
waive the limitation prescribed by this paragraph for specific 
periods of time not to exceed six months whenever he determines 
that such a waiver is necessary in order to carry out the purposes 
of this title. 

(8) Consistent with the provisions of this Act, the Director 
shall assure that financial assistance under this title will be dis- 
tributed on an equitable basis in any community and within any 
State so that all significant segments of the low-income population 
are being served. 

DURATION OF PROGRAM 

Sec. 245. The Director shall carry out the programs provided for in 
this title during the fiscal year ending June 30, 1967, and the eleven 

' Should read "Director of the Oflace of Management and Budget". 



86 



200 

succeeding fiscal years. For each such fiscal year only such sums may 
be appropriated as the Congress may authorize by law. 

TITLE III— SPECIAL PROGRAMS TO COMBAT POVERTY 
IN RURAL AREAS 

Part A — Rural Loan Programs 

STATEMENT OF PURPOSE 

Sec. 301. It is the purpose of this part to meet some of the special 
needs of low-income rural families by establishing a program of loans 
to assist in raising and maintaining their income living standards. 

LOANS TO FAMILIES 

Sec. 302. (a) The Director is authorized to make loans having a 
maximum maturity of 15 years and in amounts not resulting in an 
aggregate principal indebtedness of more than $3,500 at any one time 
to any low income rural famil}- where, in the judgment of the Director, 
such loans have a reasonable possibility of effecting a permanent 
increase in the income of such families, or, in the case of the elderly, 
will coiitiibute to the improvement of their living or housing condi- 
tion by assisting or permitting them to — 

(A) acquire or improve real estate or reduce encumbrances or erect 
improvements theieon 

(B) operate or improve the operation of farms not larger than 
family sized, including but not limited to the purchase of feed, seed, 
fertilizer, livestock, poultry, and equipment, or 

(C) participate in cooperative associations; and/or to finance non- 
agricultural enterprises which will enable such families to supplement 
their income. 

(b) Loans under this section shall be made only if the family is 
not qualified to obtain such funds by loan under other Federal 
programs. 

COOPERATIVE ASSOCIATIONS 

Sec. 303. The Director is authorized to make loans to local coopera- 
tive associations furnishing essential processing, purchasing, or mar- 
keting sei vices, supplies, or facilities predominantly to low-income 
rural families. 

LIMITATIONS ON ASSISTANCE 

Sec. 304. No financial or other assistance shall be provided under 
this part unless the Director determines that — 

(a) the providing of such assistance will materially further the pur- 
poses of this part, and 

(b) in the case of assistance provided pursuant to section 303, the 
applicant is fulfilling or will fulfill a need for services, facilities, or 
activities which is not otherwise being met. 

LOAN TERMS AND CONDITIONS 

Sec. 305. Loans pursuant to sections 302 and 303 shall have such 
terms and conditions as the Director shall determine, subject to the 
following limitations: 



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(a) there is reasonable assurance of repayment of the loan; 

(b) the credit is not otherwise available on reasonable terms from 
private sources or other Federal, State, or local programs; 

(c) the amount of the loan, together with other funds available, 
is adequate to assure completion of the project or achievement of the 
purposes for which the loan is made; 

(d) the loan bears interest at a rate not less than (1) a rate deter- 
mined by the Secretary of the Treasury, taking into consideration the 
average market yield on outstanding Treasury obUgations of com- 
parable maturity, plus (2) such additional charge, if any, toward 
covering other costs of the program as the Director may determine to 
be consistent with its purposes; 

(e) with respect to loans made pursuant to section 303, the loan is 
repayable within not more than thirty years; and 

(f) no financial or other assistance shall be provided under this part 
to or in connection with any corporation or cooperative organization 
for the production of agricultural commodities or for manufacturing 
purposes: Provided, that (1) packing, canning, cooking, freezing, or 
other processing used in preparing or marketing edible farm products, 
including dairy products, shall not be regarded as manufacturing 
merely by reason of the fact that it results in the creation of a new or 
different substance; and (2) a cooperative organization formed by 
and consisting of members of an Indian tribe (including any tribe 
with whom the special Federal relationship with Indians has been 
terminated) engaged in the production of agricultural commodities, 
or in manufacturing products, on an Indian reservation (or former 
reservation in the case of tribes with whom the special Federal rela- 
tionship with Indians has been terminated) shall not be regarded as a 
cooperative organization within the purview of this clause. 

REVOLVING FUND 

Sec. 306. (a) To carry out the lending and guaranty functions 
authorized under this part there is authorized to be established a 
revolving fund. The capital of the fund shall consist of such amounts 
as may be advanced to it by the Director from funds appropriated 
pursuant to section 321 and shall remain available until expended. 

(b) The Director shall pay into miscellaneous receipts of the Treas- 
ury, at the close of each fiscal year, interest on the capital of the fund 
at a rate determined by the Secretary of the Treasury, taking into 
consideration the average market yield on outstanding Treasury obli- 
gations of comparable maturity during the last month of the pre- 
ceding fiscal year. Interest payments may be deferred with the 
approval of the Secretary of the Treasury, but any interest payments 
so deferred shall themselves bear interest. 

(c) Whenever any capital in the fund is determined by the Director 
to be in excess of current needs, such capital shall be credited to the 
appropriation from which advanced, where it shall be held for future 
advances. 

(d) Receipts from any lending and guarantv operations under this 
part shall be credited to the fund. The fund shall be available for 
the payment of all expenditures of the Director for loans, participa- 
tions, and guaranties authorized under this part. 



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Part B — Assistance for Migrant, and Other Seasonally 
Employed, Farmworkers and Their Families 



statement of purpose 

Sec. 311. The purpose of this part is to assist migrant and seasonal 
farmworkers and their families to improve their Uving conditions 
and develop skills necessary for a productive and self-sufficient life 
in an increasingly complex and technological society. 

financial assistance 

Sec. 312. (a) The Director may provide financial assistance to assist 
State and local agencies, private nonprofit institutions and coopera- 
tives in developing and carrying out programs to fulfill the purpose 
of this part. 

(b) Programs assisted under this part may include projects or 
activities — 

(1) to' meet the immediate needs of migrant and seasonal farm- 
workers and their families, such as day care for children, educa- 
tion, health services, improved housing and sanitation (including 
the provision and maintenance of emergency and temporary 
housing and sanitation facilities), legal advice and representation, 
and consumer training and counseling; 

(2) to promote increased community acceptance of migrant 
and seasonal farmworkers and their families ; and 

(3) to equip unskilled migrant and seasonal farmworkers and 
members of their families as appropriate through education and 
developmental programs to meet the changing demands in agri- 
cultural employment brought about by technological advance- 
inent and to take advantage of opportunities available to improve 
their well-being and self-sufficiency by gaining regular or perma- 
nent employment or by participating in available Government 
employment or training programs. 

limitations on assistance 

Sec. 313 (a) Assistance shall not be extended under this part unless 
the Director determines that the applicant will maintain its prior 
level of effort in similar activities. 

(b) The Director shall establish necessary procedures or require- 
ments to assure that programs under this part are carried on in co- 
ordination with other programs or activities providing assistance to 
the persons and groups served. 

technical assistance, training, and evaluation 

Sec. 314. The Director may provide directly or through grants, con- 
tracts, or other arrangements, such technical assistance or training 
of personnel as may be required to implement effectively the purposes 
of this title. 

SPECIAL responsibilities 

Sec. 315. The Director shall be responsible for coordinating pro- 
grams under this part with other Federal programs designed to assist 



89 



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or serve migrant and seasonal farmworkers, and for reviewing and 
monitoring such programs. 

Part C — Duration of Program 

Sec. 321. The Director shall carry out the programs provided for 
in this title during the fiscal year ending June 30, 1967, and the eleven 
succeeding fiscal years. For each such fiscal year only such sums 
may be appropriated as the Congress may authorize by law. 

TITLE IV— COMPREHENSIVE HEALTH SERVICES 

comprehensive health services 

Sec. 401. (a) The Secretary shall establish within the Department 
of Health, Education, and Welfare a ''Comprehensive Health Services" 
program which shall include — 

(1) programs to aid in developing and carrying out compre- 
hensive health services projects focused upon the needs of urban 
and rural areas having high concentrations or proportions of 
poverty and marked inadequacy of health services for the poor. 
These projects shall be designed — 

(A) to make possible, with maximum feasible use of exist- 
ing agencies and resources, the provision of comprehensive 
health services, such as preventive medical, diagnostic, 
treatment, rehabilitation, family planning, narcotic ad- 
diction and alcoholism prevention and rehabilitation, mental 
health, dental, and followup services, together with neces- 
sary related facilities and services, except in rural areas 
where the lack of even elemental health services and personnel 
may require simpler, less comprehensive services to be 
estabUshed first ; and 

(B) to, assure that these services are made readily acces- 
sible to low-income residents of such areas, are furnished in 
a manner most responsive to their needs and with their par- 
ticipation and wherever possible are combined with, or in- 
cluded within, arrangements for providing employment, 
education, social, or other assistance needed b}^ the families 
and individuals served except that pursuant to such regula- 
tions as the Secretary of Health, Education, and Welfare 
may prescribe, persons provided assistance through pro- 
grams assisted under this paragraph who are not members 
of low-income families may be required to make payment, 
or have payment made in their behalf, in whole or in part 
for such assistance ; and 

(2) programs to provide financial assistance to public or private 
agencies to projects designed to develop knowledge or enhance 
skills in the field of health services for the poor. Such projects 
shall encourage both prospective and practicing health pro- 
fessionals to direct their talents and energies toward providing 
health services for the poor. 

Funds for financial assistance under paragraph (1) of this subsection 
shall be allotted according to need, and capacity of applicants to make 
rapid and effective use of that assistance, and may be used as neces- 



90 



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sary to pay the full costs of projects. Before approving any project, 
the Secretary shall soHcit and consider the comments and recom- 
mendations of the local medical associations in the area and shall con- 
sult with appropriate Federal, State, and local health agencies and 
take such steps as may be required to assure that the program will be 
carried out under competent professional supervision and that exist- 
ing agencies providing related services are furnished all assistance 
needed to permit them to plan for participation in the program and 
for the necessary continuation of those related services. In carrying 
out the provisions of paragraph (2) of this subsection, the Secretary 
is authorized to provide or arrange for training and study in the field 
of health services for the poor. 

(b) Pursuant to regulations prescribed by him, the Secretary may 
arrange for the payment of stipends and allowances (including travel 
and subsistence expenses) for persons undergoing such training and 
study and for their dependents. 

(c) The Secretary shall achieve effective coordination of programs 
and projects authorized under this section with other related activities. 

DRUG REHABILITATION AND ALCOHOLIC COUNSELING PROGRAMS 

Sec. 402. In addition to the authority conferred under section 401 of 
this title the Secretary is authorized, as part of the Comprehensive 
Health Services program, to carry out the following programs: 

(1) An "Alcoholic Counseling and Recovery" program designed 
to discover and treat the disease of alcoholism. Such program should 
be community based, serve the objective of the maintenance of the 
family structure as well as the recovery of the individual alcoholic, 
encourage the use of neighborhood facilities and the services of recov- 
ered alcoholics as counselors, and emphasize the reentry of the alco- 
holic into society rather than the institutionalization of the alcoholic. 

(2) A "Drug Rehabilitation" program designed to discover the 
causes of drug abuse and addiction, to treat narcotic and drug addic- 
tion and the dependence associated with drug abuse, and to rehabili- 
tate the drug abuser and drug addict. Such program should deal with 
the abuse or addiction resulting from the use of narcotic drugs such as 
heroin, opium, and cocaine, stimulants such as amphetamines, depres- 
sants, marihuana, hallucinogens, and tranquilizers. Such program 
should be community based, serve the objective of the maintenance of 
the family structure as well as the recovery of the individual drug 
abuser or addict, encourage the use of neighborhood facilities and the 
services of recovered drug abusers and addicts as counselors, and em- 
phasize the reentry of the drug abuser and addict into societ}^ rather 
than his institutionalization. The Secretary is authorized to undertake 
special programs aimed at promoting employment opportunities for 
rehabilitated addicts or addicts enrolled and participating in metha- 
done maintenance treatment or therapeutic programs, and assisting 
employers in dealing with addiction and drug abuse and dependency 
problems among formerly hardcore unemployed so that they can be 
maintained in employment. In undertaking such programs, the Secre- 
tary shall give special priority to veterans and employers of significant 
numbers of veterans, with priority to those areas within the States 
having the highest percentages of addicts. The Secretary is further 
authorized to establish procedures and policies which will allow clients 



91 



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to complete a full course of rehabilitation even though they become 
non-low-income by virtue of becoming employed as a part of the reha- 
bilitation process but there shall be no change in income eligibility 
criteria for initial admission to treatment and rehabilitation programs 
under this Act. 

TITLE V— HEADSTART AND FOLLOW THROUGH 

SHORT TITLE 

Sec. 501. This title may be cited as the "Headstart-Follow Through 
Act" (hereinafter in this title referred to as the "Act"). 

STATEMENT OF PURPOSE 

Sec. 502. In recognition of the role which Project Heads tart has 
played in the effective delivery of comprehensive health, educational, 
nutritional, social, and other services to economically disadvantaged 
children and their families, the Act extends the authority for appro- 
priation of funds for that program. 

POLICY WITH RESPECT TO INDIAN AND MIGRANT CHILDREN 

Sec. 503. In carrying out the purposes of part A the Secretary shall 
continue the administrative arrangement responsible for meeting the 
•needs of migrant and Indian children and shall assure that appropriate 
funding is provided to meet such needs. 

Part A — Headstart Programs 

financial assistance for headstart programs 

Sec. 511. The Secretary may, upon application by an agency which 
is ehgible for designation as a Headstart agency pursuant to section 
514, provide financial assistance to such agency for the planning, con- 
duct, administration, and evaluation of a Headstart program focused 
primarily upon children from low-income families who have not 
reached the age of compulsory school attendance which (1) will pro- 
vide such comprehensive health, nutritional, educational, social, and 
other services as will aid the children to attain their full potential, and 
(2) will provide for direct participation of the parents of such chil- 
dren in the development, conduct, and overall program direction at 
the local level. 

authorization of appropriations 

Sec. 512. There are authorized to be appropriated for carrying out 
the purposes of this part such sums as may be necessary for fiscal years 
1975 through 1977. 

allotment of funds; limitations on assistance 

Sec. 513. (a) Of the sums appropriated pursuant to section 512 
for any fiscal year beginning after June 30, 1975, the Secretary shall 
allot not more than 2 per centum among Guam, American Samoa, the 
Trust Territory of the Pacific Islands, and the Virgin Islands, accord- 



92 



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ing to their respective needs. In addition, the Secretary shall reserve 
not more than 20 per centum of the sums so appropriated for use in 
accordance with such criteria and procedures as he may prescribe. The 
remainder shall be allotted among the States, in accordance with the 
latest satisfactory available data, so that equal proportions are distrib- 
uted on the basis of (1) the relative number of public assistance recip- 
ients in each State as compared to all States, and (2) the relative 
number of related children living with families with incomes below the 
poverty line in each State as compared to all States; but there shall be 
made available, for use by Headstart programs within each State, no 
less funds for any fiscal year than were obligated for use by Headstart 
programs within such State with respect to fiscal year 1975. Allocation 
of such increases within each State shall, to the extent feasible, be made 
in such manner as to reflect the proportionate increases in program 
costs incurred by grantees, in accordance with regulations which the 
Secretary shall prescribe for this purpose. For the purpose of this sub- 
section, the Secretary shall utilize the criteria of poverty used by the 
Bureau of the Census in compiling the 1970 decennial census. 

(b) Financial assistance extended under this part for a Headstart 
program shall not exceed 80 per centum of the approved costs of the 
assisted program or activities, except that the Secretary may approve 
assistance in excess of such percentage if he determines, in accord- 
ance with regulations establishing objective criteria, that such action 
is required in furtherance of the purposes of this part. Non-Federal 
contributions may be in cash or in kind, fairly evaluated, including but 
not limited to plant, equipment, or services. The Secretary shall not 
require non-Federal contributions in excess of 20 per centum of the 
approved costs of programs or activities assisted under this part. 

(c) No programs shall be approved for assistance under this part 
unless the Secretary is satisfied that the services to be provided under 
such program will be in addition to, and not in substitution for, com- 
parable services previously provided without Federal assistance. The 
requirement imposed by the preceding sentence shall be subject to 
such regulations as the Secretary may prescribe. 

(d) The Secretary shall establish policies and procedures designed 
to assure that for fiscal year 1975 not less than 10 per centum of the 
total number of enrollment opportunities in Headstart programs in 
the Nation shall be available for handicapped children and that for 
fiscal year 1976 and thereafter no less than 10 per centum of the total 
number of enrollment opportunities in Headstart programs in each 
State shall be available for handicapped children (as defined in para- 
graph (1) of section 602 of the Education of the Handicapped Act) 
and that services shall be provided to meet their special needs. The Sec- 
retary shall report to the Congress at least annually on the status of 
handicapped children in Headstart programs, including the number of 
children being served, their handicapping conditions, and the services 
being provided such children. 

(e) The Secretary shall adopt appropriate administrative measures 
to assure that the benefits of this part will be distributed equitably 
between residents of rural and urban areas. 

DESIGNATION OF HEADSTART AGENCIES 

Sec. 514. (a) The Secretary is authorized to designate as a Head- 
start agency and local pubHc or private nonprofit agency which (1) 



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has the power and authority to carry out the purposes of this part and 
perform the functions set forth in section 515 within a community, and 
(2) is determined by the Secretary to be capable of planning, con- 
ducting, administering, and evaluating, either directly or by other 
arrangements, a Heads tart program. 

(b) For the purposes of this title, a community may be a city, 
county, or multicity or multicounty unit within a State, an Indian 
reservation, or a neighborhood or other area (irrespective of bound- 
aries or political subdivisions) which provides a suitable organizational 
base and possesses the commonality of interest needed to operate a 
Heads tart program. 

(c) In the administration of the provisions of this section, the 
Secretary shall give priority in the designation of Headstart agencies 
to any local public or private nonprofit agency which is receiving 
funds under any Headstart program on the date of the enactment of 
this Act, except that the Secretary shall, before giving such priority, 
determine that the agency involved meets program and fiscal require- 
ments established by the Secretary. 

POWERS AND FUNCTIONS OF HEADSTART AGENCIES 

Sec. 515. (a) In order to be designated as a Headstart agency 
under this part, an agency must have authority under its charter or 
applicable law to receive and administer funds under this part, funds 
and contributions from private or local public sources which may be 
used in support of a Headstart program, and funds under any Federal 
or State assistance program pursuant to which a public or private 
nonprofit agency (as the case may be) organized in accordance with 
this part, could act as grantee, contractor, or sponsor of projects appro- 
priate for inclusion in a Headstart program. Such an agency must 
also be empowered to transfer funds so received, and to delegate 
powers to other agencies, subject to the powers of its governing board 
and its overall program responsibilities. This power to transfer funds 
and delegate powers must include the power to make transfers and 
delegations covering component projects in all cases where this will 
contribute to efficiency and effectiveness or otherwise further program 
objectives. 

(b) In order to be so designated, a Headstart agency must also 
(1) establish effective procedures by which parents and area residents 
concerned will be enabled to influence the character of programs 
affecting their interests, (2) provide for their regular participation in 
the implementation of such programs, and (3) provide technical and 
other support needed to enable parents and area residents to secure 
on their own behalf available assistance from public and private 
sources. 

SUBMISSION OF PLANS TO GOVERNORS 

Sec. 516. In carrying out the provisions of this part, no contract, 
agreement, grant, or other assistance shall be made for the purpose 
of carrying out a Headstart program within a State unless a plan 
setting forth such proposed contract, agreement, grant, or other 
assistance has been submitted to the Governor of the State, and such 
plan has not been disapproved by the Governor within thirty days 
of such submission, or, if so disapproved, has been reconsidered by 
the Secretary and found by him to be fully consistent with the pro- 



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visions and in furtherance of the purposes of this part. Funds to cover 
the costs of the proposed contract, agreement, grant, or other as- 
sistance shall be obligated from the appropriation which is current 
at the time the plan is submitted to the Governor. This section shall 
not, however, apply to contracts, agreements, grants, loans, or other 
assistance to any institution of higher education in existence on the 
date of enactment of this Act. 

ADMINISTRATIVE REQUIREMENTS AND STANDARDS 

Sec. 517. (a) Each Heads tart agency shall observe standards of 
organizations, management, and administration which will assure, 
so far as reasonably possible, that all program activities are conducted 
in a manner consistent with the purposes of this part and the objective 
of providing assistance effectively, efficiently, and free of any taint 
of partisan political bias or personal or family favoritism. Each such 
agency shall establish or adopt rules to carry out this section, which 
shall mclude rules to assure full staff accountability in matters gov- 
erned by law, regulatory, or agency policy. Each agency shall also 
provide for reasonable public access to information, including but 
not limited to public hearings at the request of appropriate com- 
munity groups and reasonable public access to books and records 
of the agency or other agencies engaged in program activities or 
operations involving the use of authority of funds for which it is 
responsible. Each such agency shall adopt for itself and other agen- 
cies using funds or exercising authority for which it is responsible, 
rules designed to establish specific standards, governing salaries, 
salary increases, travel and per diem allowances, and other employee 
benefits; to assure that only personnel capable of discharging their 
duties with competence and integrity are employed and that em- 
ployees are promoted or advanced under impartial procedures cal- 
culated to improve agency performance, and effectiveness; to guard 
against personal or financial conflicts of interest; and to define em- 
ployee duties in an appropriate manner which will in any case preclude 
employees from participating, in connection with the performance of 
their duties, in any form of picketing, protest, or other direct action 
which is in violation of law. 

(b) No financial assistance shall be extended under the Act in any 
case in which the Secretary determines that the costs of developing 
and administering a program assisted under the Act exceed 15 per 
centum of the total costs, including non-Federal contributions to such 
costs, of such program. The Secretary shall establish by regulation, 
criteria for determining (i) the costs of developing and administering 
such program and (ii) the total costs of such program. In any case 
in which the Secretary determines that the cost of administering such 
program does not exceed 15 per centum of such total costs but is, in 
his judgment, excessive, he shall forthwith require the recipient of 
such financial assistance to take such steps prescribed by him as will 
eliminate such excessive administrative cost, including the sharing by 
one or more Headstart agencies of a common director and other ad- 
ministrative personnel. The Secretary may waive the limitation pre- 
scribed by this paragraph for specific periods of time not to exceed 
six months whenever he determines that such a waiver is necessary 
in order to carry out the purposes of the Act. 



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(c) The Secretary shall prescribe rules or regulations to supple- 
ment subsection (a) of this section, which shall bo binding on all 
agencies carrsdng on Headstart program activities with financial 
assistance under this part. He may, where appropriate, establish spe- 
cial or simplified requirements for smaller agencies or agencies oper- 
ating in rural areas. Policies and procedures shall be established to 
insure that indirect costs attributable to the common or joint use of 
facilities and services by programs assisted under this part and other 
programs shall be fairly allocated among the various programs which 
utihze such facilities and services. 

(d) At least thirty days prior to their effective date, all rules, regu- 
lations, guidelines, instructions, and application forms shall be pub- 
lished in the Federal Register and shall be sent to each grantee with 
the notification that each such grantee has the right to submit com- 
ments pertaining thereto to the Secretary prior to the final adoption 
thereof. 

PARTICIPATION IN HEADSTART PROGRAMS 

Sec. 518. (a) The Secretary shall by regulation prescribe eligi- 
bility for the participation of persons in Headstart programs assisted 
under this part. Such criteria may provide (1) that children from 
low-income families shall be ehgible for participation in programs 
assisted under this part if their families are below the poverty line, 
or if their families are eligible or in the absence of child care would 
potentially be eligible for public assistance; and (2) pursuant to such 
regulations as the Secretary shall prescribe that programs assisted 
under this part may include, to a reasonable extent, participation of 
children in the area served who would benefit from such programs 
but whose families do not meet the low-income criteria prescribed 
pursuant to clause (1). 

(b) The Secretary shall not prescribe any fee schedule or otherwise 
provide for the charging of any fees for participation in Headstart 
programs, unless such fees are authorized by legislation hereafter 
enacted. Nothing in this subsection shall be construed to prevent the 
families of children who participate in Headstart programs and who 
are willing and able to pay the full cost of such participation from 
doing so. 

APPEALS, NOTICE, AND HEARING 

Sec. 519. The Secretary shall prescribe procedures to assure that — 

(1) special notice of and an opportunity for a timely and ex- 
peditious appeal to the Secretary will be provided for an agency 
or organization which desires to serve as a delegate agency under 
this part and whose appUcation to the Headstart agency has been 
wholly or substantially rejected or has not been acted upon within 
a period of time deemed reasonable by the Secretary, in accord- 
ance with regulations which he shall prescribe; 

(2) financial assistance under this part shall not be suspended, 
except in emergency situations, unless the recipient agency has 
been given reasonable notice and opportimity to show cause why 
such action should not be taken; and 

(3) financial assistance under this part shall not be terminated, 
an application for refunding shall not be denied, and a suspen- 
sion of financial assistance shall not be continued for longer than 



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thirty days, unless the recipient has been afforded reasonable 
notice and opportunity for a full and fair hearing. 

RECORDS AND AUDITS 

Sec. 520. (a) Each recipient of financial assistance under this part 
shall keep such records as the Secretary shall prescribe, including 
records which fully disclose the amount and disposition by such re- 
cipient of the proceeds of such financial assistance, the total cost of 
the project or undertaking in connection with which such financial 
assistance is given or used, the amount of that portion of the cost of 
the project or undertaking suppUed by other sources, and such other 
records as will facilitate an effective audit. 

(b) The Secretar}^ and the Comptroller General of the United 
States, or any of their duly authorized representatives, shall have 
access for the purpose of audit and examination to any books, docu- 
ments, papers, and records of the recipients that are pertinent to the 
financial assistance received under this part. 

TECHNICAL ASSISTANCE AND TRAINING 

Sec. 521. The Secretary may provide, directly, or through grants or 
other arrangements, (1) technical assistance to communities in devel- 
oping, conducting, and administering programs under this part, and 
(2) training for specialized or other personnel needed in connection 
with Heads tart programs. 

RESEARCH, DEMONSTRATION, AND PILOT PROJECTS 

Sec. 522. (a) The Secretary may provide financial assistance 
through grants or contracts for research, demonstration, or pilot proj- 
ects conducted by public or private agencies which are designed to 
test or assist in the development of new approaches or methods that 
will aid in overcoming special problems or otherwise in furthering the 
purposes of this part. 

(b) The Secretary shall establish an overall plan to govern the 
approval of research, demonstration, or pilot projects and the use of 
all research authority under this part. Such plan shall set forth specific 
objectives to be achieved and priorities among such objectives. 

announcement of research, demonstration, and PILOT projects 

CONTRACTS 

Sec. 523. (a) The Secretary shall make a public announcement 
concerning — 

(1) the title, purpose, intended completion date, identity of the 
grantee or contractor, and proposed cost of any grant or contract 
with a private or non-Federal public agency or organization for 
any research, demonstration, or pilot project under this title; and 

(2) the results, findings, data, or recommendations made or 
reported as a result of such activities. 

(b) The public announcements required by subsection (a) of this 
section shall be made within thirty days of makhig such grants or 
contracts, and the public announcements required by subsection (b) 
of this section shall be made within thirty days of the receipt of such 
results. 



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(c) The Director shall take necessary action to assure that all 
studies, proposals, and data produced or developed with Federal funds 
employed under this title shall become the property of the United 
States. 

(d) The Director shall publish summaries of the results of activities 
carried out pursuant to this title not later than ninety days after the 
completion thereof. The Director shall submit to the appropriate 
committees of the Congress copies of all such summaries. 

EVALUATION 

Sec. 524. (a) The Secretary shall provide, directly or through 
grants or contracts, for the continuing evaluation of programs under 
this part, including evaluations that measure and evaluate the impact 
of programs authorized by this part, in order to determine their effec- 
tiveness in achieving stated goals, their impact on related programs, 
and their structure and mechanism for delivery of services, including, 
where appropriate, comparisons with appropriate control groups 
composed of persons who have not participated in such programs. 
Evaluations shall be conducted by persons not directly involved in the 
administration of the program or project evaluation. 

(b) Prior to obligating funds for the programs and projects cov- 
ered by this part with respect to fiscal year 1976, the Secretary shall 
develop and publish general standards for evaluation of program and 
project effectiveness in achieving the objectives of this part. The extent 
to which such standards have been met shall be considered in deciding 
whether to renew or supplement financial assistance authorized under 
this part. 

(c) In carrying out evaluations under this part, the Secretary may 
require Headstart agencies to provide for independent evaluations. 

(d) In carrying out evaluations under this part, the Secretaiy 
shall, whenever feasible, arrange to obtain the specific views of persons 
participating in and served by programs and projects assisted under 
this part about such programs and projects. 

(e) The Secretary shall publish the results of evaluative research 
and summaries of evaluations of program and project impact and 
effectiveness not later than ninety days after the completion thereof. 
The Secretary shall submit to the appropriate committee of the Con- 
gress copies of all such research studies and evaluation summaries. 

(f) The Secretary shall take the necessary action to assure that all 
studies, evaluations, proposals, and data produced or developed with 
assistance under this part shall become the property of the United 
States. 

POVERTY LINE 

Sec. 525. (a) The Secretary shall revise annually (or at any shorter 
interval he deems feasible and desirable) a poverty line which, except 
as provided in section 518, shall be used as a criterion of eligibility for 
participation in Headstart programs. 

(b) The revision required by subsection (a) of this section shall 
be accomplished by multiplying the official poverty line (as defined 
by the Office of Management and Budget) by the percentage change in 
the Consumer Price Index during the annual or other interval imme- 
diately preceding the time at which the revision is made. 



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212 

(c) Revisions required by subsection (a) of this section shall be 
made and issued not more than thirty days after the date on which 
the necessary Consumer Price Index data becomes available. 

Part B — Follow Through Programs 

financial assistance for follow through programs 

Sec. 551. (a)(1) The Secretary' is authorized to provide financial 
assistance in the form of grants to local educational agencies, combina- 
tions of such agencies, and, as provided in paragraph (2) of this 
subsection, any other public or appropriate nonprofit private agencies, 
organizations, and institutions for the purpose of carrying out Follow 
Through programs focused primarily on children from low-income 
famihes in kindergarten and primary grades, including such children 
enrolled in private nonprofit elementary schools, who were previously 
enrolled in Headstart or similar programs. 

(2) Whenever the Secretary determines (A) that a local educa- 
tional agency receiving assistance under paragraph (1) is unable or 
unwilling to include in a Follow Through program children enrolled 
in nonprofit private schools who would otherwise be eligible to par- 
ticipate therein, or (B) that it is otherwise necessary in order to 
accomplish the purposes of this section he may provide financial assist- 
ance for the purpose of carrying out a Follow Through program to 
any other public or appropriate nonprofit private agency, organiza- 
tion, or institution. 

(3) Programs to be assisted under this section shall provide such 
comprehensive services as the Secretary determines will aid in the 
continued development of children described in paragraph (1) to their 
full potential. Such projects shall provide for the direct participation 
of the parents of such children in the development, conduct, and 
overall direction of the program at the local level. If the Secretary 
determines that participation in the project of children who are not 
from low-income families will serve to carry out the purposes of this 
section, he may provide for the inclusion of such children from non- 
low-income families, but only to the extent that their participation 
will not dilute the effectiveness of the services designed for children 
described in paragraph (1) of this subsection. 

AUTHORIZATION OF APPROPRIATIONS 

Sec. 552. (a) There are authorized to be appropriated for carrying 
out the purposes of this part $60,000,000 for the fiscal year 1975, and 
for each of the two succeeding fiscal years. Funds so appropriated 
shall remain available for obligation and expenditure during the fiscal 
year succeeding the fiscal year for which they are appropriated. 

(b) Financial assistance extended under this part for a Follow 
Through program shall not exceed 80 per centum of the approved 
costs of the assisted program or activities, except that the Secretary 
may approve assistance in excess of such percentage if he determines, 
in accordance with regulations establishing objective criteria, that 
such action is required in furtherance of the purposes of this part. Non- 
Federal contributions may be in cash or in kind, fairly evaluated, 
including but not limited to plant, equipment, or services. The Secre- 



99 



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tary shall not require non-Federal contributions in excess of 20 per 
centum of the approved costs of programs or activities assisted under 
this part. 

(c) No project shall be approved for assistance under this part 
unless the Secretary is satisfied that the services to be provided under 
such project \vill be in addition to, and not in substitution for, services 
previously provided without Federal assistance. The requirement 
imposed by the preceding sentence shall be subject to such regulations 
as the Secretary may adopt. 

RESEARCH, DEMONSTRATION, AND PILOT PROJECTS) EVALUATION; AND 
TECHNICAL ASSISTANCE ACTIVITIES 

Sec. 553. (a) In conjunction with other activities authorized by 
this part, the Secretary may — 

(1) provide financial assistance by contract or otherwise, for 
research, demonstration, or pilot projects conducted by public or 
private agencies which are designed to test or assist in the develop- 
ment of new approaches or methods that will aid in overcoming 
special problems or otherwise in furthering the purposes of this 
part; 

(2) provide, directly or through grants or contracts, for the con- 
tinuing evaluation of projects assisted under this part, including 
evaluations that describe and measure the impact of such projects 
their effectiveness in achieving stated goals, their impact on 
related programs, and their structure and mechanisms for delivery 
of services, including, where appropriate, comparisions with 
appropriate control groups composed of persons who have not 
participated in such projects, which evaluations shall be conducted 
by persons not directly involved in the administration of the 
project evaluated; and 

(3) provide, directly or through grants or other appropriate ar- 
rangements, (A) technical assistance to Follow Through pro- 
grams in developing, conducting, and administering programs 
under this part, and (B) training for specialized or other person- 
nel which is needed in connection with Follow Through programs. 

SPECIAL CONDITIONS 

Sec. 554. (a) Recipients of financial assistance under this part shall 
provide maximum employment opportunities for residents of the area 
to be served, and to parents of children who are participating in proj- 
ects assisted under this part. 

(b) Financial assistance under this part shall not be suspended for 
failure to comply with applicable terms and conditions, except in 
emergency situations, nor shall an application for refunding be denied, 
unless the recipient agency has been given reasonable notice and oppor- 
tunity to show cause why such action should not be taken. 

(c) Financial assistance under this part shall not be terminated for 
failure to comply with applicable terms and conditions unless the re- 
cipient has been afforded reasonable notice and opportunity for a full 
and fair hearing. 



25-371 O - 78 - 8 



100 

214 
Part C — General Provisions 

DEFINITIONS 

Sec. 571. As used in this title, the term — 

(1) "Secretary" means the Secretary of Health, Education, and 

Welfare; , , r t. t>- 

(2) "State" means a State, the Commonwealth of Puerto Rico, 
the District of C-^lumbia, Guam, American Samoa, the Virgin 
Islands, and the Trust Territory of the Pacific Islands; except 
that when used in section 513(a) of this title, the term means only 
a State, Puerto Rico, or the District of Columbia; and 

(3) "financial assistance" includes assistance provided by grant, 
agreement, or contract, and payments may be made in install- 
ments and in advance or by way of reimbursement with necessary 
adjustments on account of overpayments or underpayments. 

LABOR STANDARDS 

Sec. 572. All laborers and mechanics employed by contractors or 
subcontractors in the construction, alteration, or repair, including 
painting and decorating of projects, buildings, and works which are 
federally assisted under this title shall be paid wages at rates not less 
that those prevailing or similar construction in the locality as deter- 
mined by the Secretary of Labor in accordance with the Davis-Bacon 
Act as amended (40 U.S.C. 276a— 276a-5). The Secretary of Labor 
shall have, with respect to such labor standards, the authority and 
functions set forth in Reorganization Plan Numbered 14 of 1950 (15 
F.R. 3176; 64 Stat. 1267; 5 U.S.C. 133— 133z-15), and section 2 of the 
Act of June 1, 1934, as amended (48 Stat. 948, as amended; 40 U.S.C. 
276(C)). 

COMPARABILITY OF WAGES 

Sec. 573. (a) The Secretary shall take action as may be necessary to 
assure that persons employed in carrying out programs financed 
under this title shall not receive compensation at a rate which is (1) 
in excess of the average rate of compensation paid in the area where 
the program is carried out to a substantial number of the persons pro- 
viding substantially comparable services, or in excess of the average 
rate of compensation paid to a substantial number of the persons pro- 
viding substantially comparable services in the area of the person's 
immediately preceding employment, whichever is higher or (2) less 
than the minimum wage rate prescribed in section 6(a)(1) of the Fair 
Labor Standards Act of 1938. 

NONDISCRIMINATION PROVISIONS 

Sec. 574. (a) The Secretary shall not provide financial assistance 
for any program, project, or activity under this title unless the grant 
or contract with respect thereto specifically provides that no person 
with responsibilities in the operation thereof will discriminate with 
respect to any such program, project, or activity because of race, creed, 
color, national origin, sex, political affiliation, or beliefs. 



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215 

(b) No person in the United States shall on the ground of sex be 
excluded from participation in, be denied the benefits of, be subjected 
to discrimination under, or be denied employment in connection with 
any program or activity receiving assistance under this title. The 
Director shall enforce the provisions of the preceding sentence in 
accordance with section 602 of the Civil Rights Act of 1964. Section 
603 of such Act shall apply with respect to any action taken by the 
Secretary to enforce such sentence. This section shall not be construed 
as affecting any other legal remedy that a person may have if that 
person is excluded from participation in, denied the benefits of, sub- 
jected to discrimination under, or denied employment in connection 
with, any program, project, or activity receiving assistance under this 
title. 

LIMITATION WITH RESPECT TO CERTAIN UNLAWFUL ACTIVITIES 

Sec. 575. No individual employed or assigned by any Headstart 
agency or other agency assisted under this title shall, pursuant to or 
during the performance of services rendered in connection with any 
program or activity conducted or assisted under this part by such 
Headstart agency or such other agency, plan, initiate, participate in, 
or otherwise aid or assist in the conduct or any unlawful demonstra- 
tion, rioting, or civil disturbance. 

POLITICAL ACTIVITIES 

Sec. 576. (a) For purposes of chapter 15 of title 5 of the United 
States Code any agency which assumes responsibility for planning, 
developing, and coordinating Headstart programs and receives assist- 
ance under this title shall be deemed to be a State or local agency ; and 
for purposes of clauses (1) and (2) of section 1502(a) of such title any 
agency receiving assistance under this title shall be deemed to be a 
State or local agency. 

(b) Programs assisted under this title shall not be carried on in a 
manner involving the use of program funds, the provision of services, 
or the employment or assignment of personnel in a manner supporting 
or resulting in the identification of such programs with (1) any 
partisan or nonpartisan political activity or any other political activity 
associated with a candidate or contending faction or group, in an 
election for public or party office, (2) any activity to provide voters or 
prospective voters with transportation to the polls or similar assistance 
in connection with any such election, or (3) any voter registration 
activity. The Secretary, after consultation with the Civil Service 
Commission, shall issue rules and regulations to provide for the en- 
forcement of this section, which shall include provisions for sum- 
mary suspension of assistance or other action necessary to permit 
enforcement on an emergency basis. 

ADVANCE FUNDING 

Sec. 577. For the purpose of affording adequate notice of funding 
available under this title, appropriations for carrying out this title are 
authorized to be included m an appropriation Act for the fiscal year 
preceding the fiscal year for which they are available for obligation. 



102 

216 

Part D — Day Care Projects 

statement of purpose 

Sec. 581. The purpose of this part is to provide day care for children 
from families which need such assistance to become or remain self- 
sufficient or otherwise to obtain objectives related to the purposes of 
this Act, with particular emphasis upon enabling the parents or rela- 
tives of such children to choose to undertake or to continue basic 
education, vocational training, or gainful employment. 

FINANCIAL ASSISTANCE FOR DAY CARE PROJECTS 

Sec 582. (a) The Secretary is authorized to provide financial as- 
sistance to appropriate public agencies and private organizations to 
pay not to exceed 90 per centum of the cost of planning, conducting, 
administering, and evaluating projects under which children from 
low-income families or from urban and rural areas with large concen- 
trations or proportions of low-income persons may receive day care. 
Non-Federal contributions may be in cash or in kind, fairly evaluated, 
including but not limited to plant, equipment and services. Such day 
care projects shall provide health, education, social, and such other 
supportive services as may be needed. Financial assistance under this 
section may be provided to employers, labor unions, or to joint em- 
ployer-union organizations, for day care projects established at or in 
association with a place of employment or training where such projects 
are financed in major part through private funds. Project costs payable 
under this part may include costs of renovation and alteration of 
physical facilities. Financial assistance under this section may be 
provided in conjunction with or to supplement day care projects under 
the Social Security Act or other relevant statutes. 

(b) The Secretary may require a family which is not a low-income 
family to make payment, in whole or in part, for the day care services 
provided under this program where the family's financial condition 
IS, or becomes through employment or otherwise, such as to make such 
payment appropriate. 

(c) The Secretary may provide, directly or through contracts or 
other arrangements, technical assistance and training necessary for 
the initiation or effective operation of programs under this part. 

(d) The Secretary shall take all necessary steps to coordinate pro- 
grams under his jurisdiction which provide day care, with a view to 
establishing, insofar as possible, a common set of program standards 
and regulations, and mechanisms for coordination at the State and 
local levels. Such standards shall be no less comprehensive than the 
Federal interagency day care requirements as approved by the De- 
partment of Health, Education, and Welfare, the Office of Economic 
Opportunity, and the Department of Labor on September 23, 1968. In 
approving applications for assistance under this part, the Secretary 
shall take into consideration (1) the extent to which applicants show 
evidence of coordination and cooperation between their projects and 
other day care programs in the area which they will serve, and (2) the 
extent to which unemployed or low-income individuals are to be em- 
ployed, including individuals receiving or eligible to receive assistance 
under the Social Security Act. 



103 



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(e) Each project to which payments are made hereunder shall pro- 
vide for a thorough evaluation. This evaluation shall be conducted by 
such agency or mdependent public or private organization as the 
Secretary shall designate, with a view to determining, among other 
things, the extent to which the day care provided may have increased 
the employment of parents and relatives of the children served, the 
extent to which such day care may have reduced the costs of aid and 
services to such children, the extent to which such children have 
received health and educational benefits, and the extent to which the 
project has been coordinated with other day care activities in the area 
served. Up to 100 per centum of the costs of evaluation may be paid 
by the Secretary from funds appropriated for the purposes of carrying 
out this part, except that where such evaluation is carried on by the 
assisted agency itself, he may pay only 90 per centum of such costs. 
Such evaluations, together with a report on the program described in 
this part, shall be included in the report required by section 608. 

DURATION OF PROGRAMS 

Sec. 583. The Secretary shall carry out the programs provided for 
in this part during the fiscal year ending June 30, 1968, and the ten 
succeeding fiscal years. 

TITLE VI— ADMINISTRATION AND COORDINATION 
Part A — ^Administration 

COMMUNITY SERVICES ADMINISTRATION 

Sec. 601. (a) Upon the date of enactment of the Headstart, Economic 
Opportunity, and Community Partnership Act of 1974, there is estab- 
lished within the executive branch an agency known as the ''Com- 
munity Services Administration" which shall be headed by a Director 
and which shall be, in all respects and for all purposes, the successor 
authority to the Office of Economic Opportunity. The Director of the 
Administration shall be appointed by the President by and with the 
advice and consent of the Senate. The Director shall be compensated 
at a rate equal to the rate in effect for the compensation of the Director 
of the Office of Economic Opportunity on the date of the enactment of 
such Act. 

(b) There shall also be in the Administration one Deputy Director 
and Assistant Directors who shall be appointed by the President, by 
and with the advice and consent of the Senate. The Deputy Director 
and the Assistant Directors shall perform such functions as the Direc- 
tor may prescribe. The Deputy Director and the Assistant Directors 
shall be compensated at a rate equal to the rate in effect for the Deputy 
Director and the Assistant Directors, respectively, of the Office of 
Economic Opportunity on the date of enactment of the Headstart, 
Economic Opportunity, and Community Partnership Act of 1974. 

(c) Subject to the provisions of subsection (e) of this section, the 
Administration shall be an independent agency. The Director shall 
have the responsibility for carrying out titles I, II, III-B, VI, VII, 
and IX of this Act. The functions of the Director with respect to car- 
rying out titles I, II (except section 232), III-B, VI, VII, and IX of 
this Act shall not be delegated to any other officer not directly responsi- 



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ble, both with respect to program operation and administration, to the 
Du-ector. Beginning after June 15, 1975, the poUcymaking functions, 
including the final approval of grants and contracts, of the Director, 
shall not be delegated to any regional office or official. 

(d)(1) All official actions taken by the Director of the Office of 
Economic Opportunity, his designee, or any other j^erson under the 
authority of the Economic Opportunity Act of 1964 which are in force 
on the date of the enactment of the Headstart, Economic Opportunity, 
and Community Partnership Act of 1974, and for which there is con- 
tinuing authority under the provisions of this Act, shall continue in 
full force and effect until modified, superseded, or revoked by the 
Director. 

(2) All references to the Office of Economic Opportunity, or to the 
Director of the Office of Economic Opportunity, in any statute, reorga- 
nization plan, executive order, regulation, or other official document 
or proceeding shall, on and after such date, be deemed to refer to the 
Administration, or to the Director, as the case may be. 

(3) No suit, action, or other proceeding, and no cause of action, by 
or against the Office of Economic Opportunity, or any action by any 
officer thereof acting in his official capacity, shall abate by reason of 
the enactment of the Headstart, Economic Opportunity, and Com- 
munity Partnership Act of 1974. 

(4) Persons appointed by the President, by and with the advice and 
consent of the Senate, to positions in the Office of Economic Oppor- 
tunity, requiring appointment by and with such advice and consent, 
may if the President so desires, continue to serve in comparable posi- 
tions in the Administration; but the President may submit to the 
Senate nominations for appointment to any or all positions in the 
Administration, requiring the advice and consent of the Senate. 

(e)(1) After March 15, 1975, the President may submit to the Con- 
gress a reorganization plan which, subject to the provisions of para- 
graph (2) of this subsection, shall take effect if such reorganization 
plan is not disapproved by enactment of a joint resolution which shall 
be considered in Congress in accordance with the provisions of para- 
graph (3) of this subsection and the procedures established with 
respect to reorganization plans by chapter 9 of title 5, United States 
Code, except to the extent otherwise provided in this Act. 

(2) A reorganization plan submitted in accordance with the pro- 
visions of paragraph (1) shall provide — 

(A) for establishing in the Department of Health, Education, 
and Welfare a Community Services Administration — 

(i) which shall be headed by a Director, 

(ii) which shall be the principal agency, and the Director of 
which shall be the principal officer, for carrying out titles I, II, 
III-B, VI, and IX of this Act, and which, with respect to such 
provisions, shall be the successor authority to the Community 
Services Administration established by subsection (a) of this 
section. 

(iii) the Director of which shall be, in the performance of 
his functions, directly responsible to the Secretar}^, and 

(iv) in which no policymaking functions, including the 
final approval of grants or contracts, of the Director shall be 
delegated to any regional office or official. 

(B) for establishing in the Department of Commerce a Com- 
munity Economic Development Administration — 



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(i) which shall be headed by a Director, 

(ii) which shall be the principal agency, and the Director of 
which shall be the principal officer, for carrying out title VII 
of this Act, and which, with respect to such provisions, shall 
be the successor authority to the Community Services Ad- 
ministration established by subsection (a) of this section, 

(iii) the Director of which shall be, in the performance of 
his functions, directly responsible to the Secretary of Com- 
merce, and 

(iv) in which no policymaking functions, including the 
final approval of grants or contracts, of the Director shall be 
delegated to any regional office or official. 

(3) For the purpose of this subsection and chapter 9, title 5, United 
States Code, to the extent incorporated by this subsection, the follow- 
ing provisions apply: 

(A) The term ''resolution" means a joint resolution the matter 
after the resolving clause of which is: "That the Congress of the 
United States disapproves the Community Services Administra- 
tion Reorganization Plan transmitted to the Congress by the 

President on , 19 — ." The blank spaces therein are to 

be appropriately filled. 

(B) If, prior to the passage by one House of the joint reso- 
lution of that House with respect to the reorganization plan, such 
House receives from the other House a joint resolution with 
respect to the same plan, then the following procedure applies: 

(i) If no resolution of the first House with respect to 
such plan has been referred to committee, no other resolution 
with respect to the same plan may be reported or (despite 
the provisions of section 912(a) of title 5, United States 
Code) be made the subject of a motion to discharge. 

(ii) If a resolution of the first House with respect to such 
plan has been referred to committee — 

(I) the procedure with respect to that or other reso- 
lutions of such House with respect to such plan which 
have been referred to committee shall be the same as if 
no resolution from the other House with respect to such 
plan had been received; but 

(II) on any vote on final passage of a resolution of 
the first House with respect to such plan the resolution 
from the other House with respect to such plan shall be 
automatically substituted for the resolution of the first 
House. 

(4) The transfers authorized under subparagraphs (A) and (B) 
of paragraph (3) of this subsection shall be effective 30 days after 
the last date on which such reorganization plan could be disapproved 
under this subsection. 

(f) In the event that the reorganization plan pursuant to subsection 
(e) takes effect, the Director of the Community Services Administra- 
tion and the Director of the Community Economic Development 
Administration shall each be appointed by the President, by and with 
the advice and consent of the Senate, except that the person serving 
as Director of the independent Community Services Administration 
pursuant to the advice and consent of the Senate may, if the President 
notifies the Congress accordingly, continue to serve as Director of the 



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Community Services Administration within the Department of 
Health, Education, and Welfare; but the President may in such event 
submit to the Senate a nomination for such position. 

(g) In the event that the reorganization plan pursuant to sub- 
section (e) of this section takes effect, on the effective date thereof 
the property, records, and unexpended balances of appropriations, 
allocations, and other funds employed, used, held, available, or to be 
made available in connection with the functions of the Director of the 
independent Community Services Administration, established by sub- 
section (a) of this section, shall be transferred to the Director of the 
Community Services Administration, within the Department of 
Health, Education, and Welfare, and to the Director of the Community 
Economic Development Administration within the Department of 
Commerce, as appropriate. All grants, applications for grants, con- 
tracts, and other agreements awarded or entered into by the Director 
or the independent Community Services Administration shall continue 
to be recognized so that there is no disruption of ongoing activities for 
which there is continuing authority. 

(h)(1) In the event that the reorganization plan pursuant to sub- 
section (e) of this section takes effect, on the effective date thereof all 
Federal personnel employed by the independent Community Services 
Administration under the authorization and appropriations for the 
Economic Opportunity Act of 1964, transferred to the Community 
Services Administration within the Department of Health, Education, 
and Welfare or to the Community Economic Development Adminis- 
tration within the Department of Commerce shall, to the extent feasi- 
ble, be assigned to related functions and organizational units in the 
appropriate Administration, without loss of salary, rank, or other 
benefits, including the right to representation and to the existing basic 
collective-bargaining agreement. 

(2) In the event that the reorganization plan pursuant to subsec- 
tion (e) of this section takes effect, on the effective date thereof all 
official actions taken by the Director of the independent Community 
Services Administration, his designee, or any other person under the 
authority of the Economic Opportunity Act of 1964 which are in force 
on such date, and for which there is continuing authority under the 
provisions of this Act, shall continue in full force and effect until 
modified, superseded, or revoked by the Director of the Community 
Services Administration, within the Department of Health, Education, 
and Welfare, or the Director of the Community Economic Develop- 
ment Administration, within the Department of Commerce, as 
appropriate. 

(3) In the event that the reorganization plan submitted pursuant 
to subsection (e) of this section takes effect, on the effective date 
thereof all references to the independent Community Services Admin- 
istration, or to the Director of that Administration in any statute, 
reorganization plan, executive order, regulation, or other official docu- 
ment or proceeding shall, on and after such date, be deemed to refer 
to the Community Services Administration within the Department 
of Health, Education, and Welfare, or the Director of the Community 
Economic Development Administration, within the Department of 
Commerce as appropriate, or to the Director of either such Adminis- 
tration, as the case may be. 



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221 

(4) In the event that the reorganization plan submitted pursuant 
to subsection (e) of this section takes effect, on the effective date 
thereof no suit, action, or other proceeding, and no cause of action, 
by or against the independent Community Services Administration, 
or any action by any officer thereof acting in his official capacity, shall 
abate by reason of the taking effect of such plan. 

AUTHORITY OF DIRECTOR 

Sec. 602. In addition to the authority conferred upon him by other 
sections of this Act, the Director is authorized, in carrying out his 
functions under this Act, to — 

(a) appoint in accordance with the civil service laws such per- 
sonnel as may be necessary to enable the Community Services 
Administration to carry out its functions, and, except as other- 
wise provided herein, fix their compensation in accordance with 
the Classification Act of 1949 (5 U.S.C. 1071 et seq.); 

(b) (1) employ experts and consultants or organizations thereof 
as authorized by section 15 of the Administrative Expenses Act of 
1946 (5 U.S.C. 55a), except that no individual may be employed 
under the authority of this subsection for more than 100 days in 
any fiscal year; (2) compensate individuals so employed at rates 
not in excess of $100 per diem, including travel time; and (3) 
allow them, while away from their homes or regular places of 
business, travel expenses (including per diem in lieu of subsistence) 
as authorized by section 5 of such Act (5 U.S.C. 73b — 2) for 
persons in the Government service employed intermittently, 
while so employed: Provided, however, That contracts for such 
employment may be renewed annually; 

(c) appoint, without regard to the civil service laws, one or more 
advisory committees composed of such private citizens and 
officials of the Federal, State, and local governments as he deems 
desirable to advise him with respect to his functions under this 
Act; and members of such committees (including the National 
Advisory Council established in section 605), other than those 
regularly employed by the Federal Government, while attending 
meetings of such committees or otherwise serving at the request 
of the Director, shall be entitled to receive compensation and 
travel expenses as provided in subsection (b) with respect to 
experts and consultants; 

(d) with the approval of the President, arrange with and reim- 
burse the heads of other Federal agencies for the performance of 
any of his functions under this Act and, as necessary or appro- 
priate, delegate any of his powers under this Act and authorize 
the redelegation thereof subject to provisions to assure the max- 
imum possible liaison between the Community Services Adminis- 
tration and such other agencies at all operatiQ^ levels, which shall 
include the furnishing of complete operational information by 
such other agencies to the Community Services Administration 
and the furnishing of such information by such Community 
Services Administration to such other agencies; 

(e) utilize, with their consent, the services and facilities of 
Federal agencies without reimbursement, and, with the consent 
of any State or a political subdivision of a State, accept and utilize 



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the services and facilities of the agencies of such State or sub- 
division without reimbursement; 

(f) accept in the name of the Community Services Administra- 
tion, and employ or dispose of in furtherance of the purposes of 
this Act, or of any title thereof, any money, or property, real, 
personal, or mixed, tangible or intangible, received by gift, 
devise, bequest, or otherwise; 

(g) accept voluntary and uncompensated services, notwith- 
standing the provisions of section 3679(b) of the Revised Statutes 
(31 U.S.C. 665(b)); 

(h) allocate and expend, or transfer to other Federal agencies for 
expenditure, funds made available under this Act as he deems neces- 
sary to carry out the provisions hereof, including (without regard to 
the provisions of section 4774(d) of title 10, United States Code) 
expenditure for construction, repairs, and capital improvements; 

(i) disseminate, without regard to the provisions of section 4154 
of title 39, United States Code, data and information, in such forms 
as he shall deem appropriate^ to public agencies, private organiza- 
tions, and the general public^ 

(i) adopt an official seal, which shall be judicially noticed; 

(k) notwithstanding any other provision of law relating to the 
acquisition, handling, or disposal of real or personal property by 
the United States, deal with, complete, rent, renovate, modernize, 
or sell for cash or credit at his discretion any properties acquired by 
him in connection with loans, participations, and guaranties made 
by him pursuant to this Act; 

(1) collect or compromise all obligations to or held by him and 
all legal or equitable rights accruing to him in connection with the 
payment of obligations until sueh time as such obligations may be 
referred to the Attorney General for suit or collection; 

(m) expend funds made available for purposes of this Act — 

(1) for printing and binding, in accordance with applicable law 
and regulation ; and 

(2) without regard to any other law or regulation, for rent of 
buildings and space in buildings and for repair, alteration, and 
improvement of buildings and space in buildings rented by him; 
but the Director shall not utilize the authority contained in this 
subparagraph (2) — 

(A) except when necessary to obtain an item, service, or 
facility, which is required in the proper administration of this 
Act, and which otherwise could not be obtained, or could not 
be obtained in the quantity or quality needed, or at the time, 
in the form, or under the conditions in which, it is needed, and 

(B) prior to having given written notification to the 
Administrator of General Services (if the exercise of such 
authority would affect an activity which otherwise would be 
under the jurisdiction of the General Services Administration) 
of his intention to exercise such authority, the item, service, 
or facility with respect to which such authority is proposed 
to be exercised, and the reasons and justifications for the 
exercise of such authority; and 

(n) establish such policies, standards, criteria, and procedures, pre- 
scribe such rules and regulations, enter into such contracts and agree- 
ments with public agencies and private organizations and persons, 
make such payments. (in lump ^um or installments, and in advance or 



109 



223 

by way of reimbursement, and in the case of grants, with necessary 
adjustments on account of overpayments or underpayments), and 
generally perform such functions and take such steps as he may deem 
to be necessary or appropriate to carry out the provisions of this Act. 

POLITICAL ACTIVITIES 

Sec. 603. (a) For purposes of chapter 15 of title 5 of the United 
States Code any overall community action agency which assumes 
responsibility for planning, developing, and coordinating community- 
wide antipoverty programs and receives assistance under this Act 
shall be deemed to be a State or local agency; and for purposes of 
clauses (1) and (2) of section 1502(a) of such title any agency receiving 
assistance under this Act shall be deemed to be a State or local 
agency. 

(b) Programs assisted under this Act shall not be carried on in a 
manner involving the use of program funds, the provision of services, 
or the employment or assignment of personnel in a manner supporting 
or resulting in the identification of such programs with (1) any par- 
tisan or nonpartisan political activity or any other political activity 
associated with a candidate, or contending faction or group, in an 
election for public or party office, (2) any activity to provide voters or 
prospective voters with transportation to the polls or similar assistance 
in connection with any such election, or (3) any voter registration, 
activity. The Director, after consultation with the Civil Service Com- 
mission, shall issue rules and regulations to provide for the enforce- 
ment of this section, which shall include provisions for summary sus- 
pension of assistance or other action necessary to permit enforcement 
on an emergency basis. 

(c) No part of any funds appropriated to carry out this Act, sub- 
part (1) of part B of this title V of the Higher Education Act of 
1965, or any program administered by ACTION shall be used to 
finance, directly or indirectly, any activity designed to influence the 
outcome of any election to Federal office, or any voter registration 
activity, or to pay the salary of any officer or employee of the Com- 
munity Services Administration, the Teacher Corps, or ACTION, 
who, in his official capacity as such an officer or employee, engages in 
any such activity. As used in this section, the term "election" has the 
same meaning given such term by section 301(a) of the Federal Elec- 
tion Campaign Act of 1971, and the term "Federal office" has the same 
meaning given such term by section 301(c) of such Act. 

APPEALS, NOTICE AND HEARING 

Sec. 604. The Director shall prescribe procedures to assure that— 

(1) special notice of and an opportunity for a timely and ex- 
peditious appeal to the Director is provided for an agency or 
organization which would like to serve as a delegate agency under 
title II and whose application to the community action agency 
has been wholly or substantially rejected or has not been acted 
upon within a period of time deemed reasonable by the Director ; 

(2) financial assistance under title II and part B of title III 
shall not be suspended for failure to comply with applicable terms 



no 



224 

and conditions, except in emergency situations, nor shall an ap- 
plication for refunding under section 221, 222, or 312 be denied, 
unless the recipient agency has been given reasonable notice 
and opportunity to show cause why such action should not be 
taken; and 

(3) financial assistance under title II and part B of title III 
shall not be terminated for failure to comply with applicable 
terms and conditions unless the recipient agency has been 
afforded reasonable notice and opportunity for a full and fair 
hearing. 

NATIONAL ADVISORY COUNCIL ON ECONOMIC OPPORTUNITY 

Sec. 605. (a) There is hereby established in the Community Serv- 
ices Administration a National Advisory Council on Economic 
Opportunity (hereinafter referred to as the Advisory Council), to be 
composed of twenty-one members appointed, for staggered terms and 
without regard to the civil service laws, by the President. Such mem- 
bers shall be representative of the public in general and appropriate 
fields of endeavor related to the purposes of this Act. The President 
shall designate the chairman from among such members. The Ad- 
visory Council shall meet at the call of the chairman but not less 
often then four times a year. The Director shall be an ex officio member 
of the Advisory Council. 

(b) The Advisory Council shall — 

(1) advise the Director with respect to policy matters arising 
in the administration of this Act; and 

(2) review the effectiveness and the operation of programs 
under this Act and make recommendations concerning (A) the 
improvement of such programs, (B) the elimination of duplication 
of effort and (C) the coordination of such programs with other 
Federal programs designed to assist low income individuals and 
families. 

Such recommendations shall include such proposals for changes in 
this Act as the Advisory Council deems appropriate. 

(c) The Advisory Council shall make an annual report of its 
findings and recommendations to the President not later than 
March 31 of each calendar year beginning with the calendar year 
1967. The President shall transmit each such report to the Congress 
together with his comments and recommendations. 

ANNOUNCEMENT OF RESEARCH OR DEMONSTRATION CONTRACTS 

Sec. 606. (a) The Director or the head of any Federal agency 
administering a program under this Act shall make a public an- 
nouncement concerning: 

(1) The title, purpose, intended completion date, identity of 
the contractor, and proposed cost of any contract with a private 
or non-Federal public agency or organization for any demonstra- 
tion or research project; and 

(2) The results, findings, data, or recommendations made or 
reported as a result of such activities. 



Ill 



I 



225 

(b) The public announcements required by subsection (a) shall 
be made with thirty days of entering into such contracts and there- 
after within thirty days of the receipt of such results. 

(c) It shall be the duty of the Comptroller General to assure that 
the requirements of this section are met, and he shall at once report 
to the Congress concerning any failure to comply with these 
requirements. 

LABOR STANDARDS 

Sec. 607. All laborers and mechanics employed by contractors or 
subcontractors in the construction, alteration or repair, including 
painting and decorating of projects, buildings and works which are 
federally assisted under this Act shall be paid wages at rates not less 
than those prevailing on similar construction in the locality as deter- 
mined by the Secretary of Labor in accordance with the Davis-Bacon 
Act, as amended (40 U.S.C. 276a— 276a-5). The Secretary of Labor 
shall have, with respect to such labor standards, the authority and 
functions set forth in Reorganization Plan Numbered 14 of 1950 (15 
F.R. 3176; 64 Stat. 1267; 5 U.S.C. 133— 133z-15), and section 2 of 
the Act of June 1, 1934, as amended (48 Stat. 948, as amended; 40 
U.S.C. 276(C)). 

REPORTS 

Sec. 608. Not later than one hundred and twenty days after the 
close of each fiscal year, the Director shall prepare and submit to the 
President for transmittal to the Congress a full and complete report on 
the activities of the Community Services Administration during such 
year. 

[Sec. 609 repealed.] 

PROGRAMS FOR THE ELDERLY POOR 

Sec. 610. It is the intention of Congress that whenever feasible the 
special problems of the elderly poor shall be considered in the develop- 
ment, conduct, and administration of programs under this Act. The 
Director shall (1) carry out such investigations and studies, including 
consultations with appropriate agencies and organizations, as may be 
necessary to develop and carry out a plan for the participation of the 
elderly poor in programs under this Act, including programs providing 
employment opportunities, public service opportunities, education 
and other services and activities which assist the elderly poor to 
achieve self-sufficiency ; (2) maintain a constant review of all programs 
under this Act to assure that the needs of the elderly poor are given 
adequate consideration; (3) initiate and maintain interagency liaison 
with all other appropriate Federal agencies to achieve a coordinated 
national approach to the needs of the elderly poor; and (4) determine 
and recommend to the President and the Congress such programs 
requiring additional authority and the necessary legislation to pro- 
vide such authority. In exercising his responsibilities under this sec- 
tion, the Director shall cooperate with the Commissioner on Aging. 
The Director shall describe the ways in which this section has been 
implemented in the annual report required by section 608. 



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COMPARABILITY OF WAGES 

Sec. 610-1. (a) The Director shall take such action as may be neces- 
sary to assure that persons employed in carrying out programs financed 
under title II (except a person compensated as provided in section 
602) shall not receive compensation at a rate which is (1) in excess 
of the average rate of compensation paid in the area where the 
program is carried out to a substantial number of the persons 
providing substantially comparable services, or in excess of the 
average rate of compensation paid to a substantial number of the per- 
sons providing substantially comparable services in the area of the 
person's immediately preceding employment, whichever is higher or 
(2) less than the minimum wage rate prescribed in section 6(a)(1) of 
the Fair Labor Standards Act of 1938. 

(b) No person whose compensation exceeds $6,000 per annum and 
is paid pursuant to any grant contract, or agreement authorized under 
part A of title II (except a person compensated as provided in section 
602) shall be employed at a rate of compensation which exceeds by 
more than 20 percent the salary which he was receiving in his 
immediately preceding employment, but the Director may grant 
exceptions for specific cases. In determining salary in preceding 
employment for one regularly employed for a period of less than 12 
months per year, the salary shall be adjusted to an annual basis. 

LIMITATION ON BENEFITS FOR THOSE VOLUNTARILY POOR 

Sec. 611. The Director shall take such action as may be necessary 
to assure that, in determining a person's eligibility for benefits under 
this Act on account of his poverty, such person will not be deemed to 
meet the poverty criteria if his lack of income results from his refusal, 
without good cause, to seek or accept employment commensurate with 
his health, age, education, and ability. 

JOINT FUNDING 

Sec. 612. Pursuant to regulations prescribed by the President, where 
funds are advanced for a single project by more than one Federal 
Agency to a community action agency or other agency assisted under 
this Act, any one Federal agency may be designated to act for all in 
administering the funds advanced. In such cases, a single local share 
requirement may be established according to the proportion of funds 
advanced by each agency, and any such agency may waive any tech- 
nical grant or contract requirement (as defined by such regulations) 
which is inconsistent with the similar requirements of the administer- 
ing agency or which the administering agency does not impose. 

LIMITATION WITH RESPECT TO CERTAIN UNLAWFUL ACTIVITIES 

Sec. 613. No individual employed or assigned by any community 
action agency or 'other agency assisted under this Act shall, pursuant 
to or during the performance of services rendered in connection with 
any program or activity conducted or assisted under this Act by such 
community action agency or such other agency, plan, initiate, par- 



113 



227 

ticipate in, or otherwise aid or assist in the conduct of any unlawful 
demonstration rioting, or civil disturbance. 

PROHIBITION OF FEDERAL CONTROL 

Sec. 614. Nothing contained in this Act shall be construed to author- 
ize any department, agency, office, or employee of the United States 
to exercise any direction, supervision, or control over the curriculum, 
program of instruction, administration, or personnel of any educa- 
tional institution or school system. 

DURATION OF PROGRAM 

Sec. 615. The Director shall carry out the programs provided for in 
this title during the fiscal year ending June 30, 1967, and the eleven 
succeeding fiscal years. For each siich fiscal year only such sums may 
be appropriated as the Congress may authorize by law. • 

TRANSFER OF FUNDS 

Sec. 616. Notwithstanding any limitation on appropriations for any 
program or activity under this Act or any Act authorizing appropria- 
tions for such program or activity, not to exceed 10 per centum for 
fiscal years ending prior to July 1, 1970, and not to exceed 15 per 
centum for fiscal years ending prior to July 1, 1972, and not to exceed 
20 per centum for fiscal years ending thereafter of the amount ap- 
propriated or allocated from any appropriation for the purpose of en- 
abling the Director to carry out any such program or activity under 
the Act may be transferred and used by the Director for the purpose of 
carrying out any other such program or activity under the Act. 

DISTRIBUTION OF BENEFITS BETW^EEN RURAL AND URBAN AREAS 

Sec. 617. The Director shall adopt appropriate administrative 
measures to assure that benefits of this Act will be distributed equitably 
between residents of rural and urban areas. 

Sec. 618. [Expired.] 

LIMITATIONS ON FEDERAL ADMINISTRATIVE EXPENSES 

Sec. 619. The total administrative expenses, including the compen- 
sation of Federal employees, incurred by Federal agencies under the 
authority of this Act for any fiscal year shall not exceed ten percent 
of the amount authorized to be appropriated by this Act for that year: 
Provided, however, that grants, subsidies, and contributions, and pay- 
ments to individuals, other than Federal employees shall not be 
counted as an administrative expense. 

PRIVATE enterprise PARTICIPATION 

Sec. 620. The Director and the heads of any Federal departments 
or agencies to which the conduct of programs described in this Act 
have been delegated shall take such steps as may be desirable and 
appropriate to msure that the resources of private enterprise are em- 



114 



228 

ployed to the maximum feasible extent in the programs described in 
this Act. The Director and such other agency heads shall submit at 
least annually to the Congress a joint or combined report describing 
the actions taken and the progress made under this section. 

RESPONSIBILITY FOR FOLLOW THROUGH PROGRAMS 

Sec. 621. Pursuant to section 602(d), the Director shall delegate 
his functions under section 222(a)(2) to the Secretary of Health, Edu- 
cation, and Welfare, and such functions shall be carried out through 
the Office of Education of the Department of Health, Education, and 
Welfare. 

ADVANCE FUNDING 

Sec. 622. For the purpose of affording adequate notice of funding 
available under this Act, appropriations for grants, contracts, or other 
payments under this Act are authorized to be included in the appro- 
priation Act for the fiscal year preceding the fiscal year for which 
they are available for obligation. 

GUIDELINES 

Sec. 623. All rules, regulations, guidelines, instructions, and appli- 
cation forms published or promulgated pursuant to this Act shall be 
published in the Federal Register at least thirty days prior to their 
effective date. 

NONDISCRIMINATION PROVISIONS 

Sec. 624. (a) The Director shall not provide financial assistance for 
any program under this Act unless the grant, contract, or agreement 
with respect to such program specifically provides that no person with 
responsibilities in the operation of such program will discriminate 
with respect to any such program because of race, creed, color, national 
origin, sex, political affiliation, or beliefs. 

(b) No person in the United States shall on the ground of sex be 
excluded from participation in, be denied the benefits of, be subjected 
to discrimination under, or be denied employment in connection with 
any program, or activity receiving assistance under this Act. The 
Director shall enforce the provisions of the preceding sentence in 
accordance with section 602 of the Civil Rights Act of 1964. Section 
603 of such Act shall apply with respect to any action taken by the 
Director to enforce such sentence. This section shall not be construed 
as affecting any other legal remedy that a person may have if that 
person is excluded from participation in, denied the benefits of, sub- 
jected to discrimination under, or denied employment in connection 
with any program or activity receiving assistance under this Act. 

CRITERIA FOR DETERMINING ELIGIBILITY 

Sec. 625. (a) Every agency administering programs authorized by 
this Act in which the poverty line is a criterion of eligibility shall 
revise the poverty line at annual intervals, or at any shorter interval 
it deems feasible and desirable. 



115 



229 

(b) The revision required by subsection (a) of this section shall 
be accomplished by multiplying the official poverty line (as defined 
by the Office of Management and Budget) by the percentage change 
in the Consumer Price Index during the annual or other interval 
immediately preceding the time at which the revision is made. 

(c) Revisions required by subsection (a) of this section shall be 
made and issued not more than thirty days after the date on which 
the necessary consumer price index data becomes available. 

INDEPENDENCE OF LEGAL SERVICES CORPORATION 

Sec. 626. Nothing in this Act, except title X, and no reference to 
this Act unless such reference refers to title X, shall be construed to 
affect the powers and activities of the Legal Services Corporation. 

CRIMINAL PROVISIONS 

Sec 627. (a) Whoever, being an officer, director, agent, or em- 
ployee of, or connected in any capacity with, any agency receiving 
financial assistance under this Act embezzles, willfully misapplies, 
steals, or obtains by fraud any of the moneys, funds, assets, or 
property which are the subject of a grant or contract of assistance 
pursuant to this Act, shall be fined not more than $10,000 or im- 
prisoned for not more than two years, or both; but if the amount 
so embezzled, misapplied, stolen, or obtained by fraud does not exceed 
$100, he shall be fined not more than $1,000 or imprisoned not more 
than one year, or both. 

(b) Whoever, by threat of procuring dismissal of any person from 
employment or of refusal to employ or refusal to renew a contract of 
employment in connection with a grant or contract of assistance under 
this Act induces any person to give up any money or thing of any 
value to any person (including such grantee agency), shall be fined 
not more than $1,000 or imprisoned not more than one year, or both. 

WITHHOLDING CERTAIN FEDERAL TAXES BY ANTIPOVERTY AGENCIES 

Sec. 628. Upon notice from the Secretary of the Treasury or his 
delegate- that any person otherwise entitled to receive a payment made 
pursuant to a grant, contract, agreement, loan or other assistance made 
or entered into under this Act is delinquent in paying or depositing (1) 
the taxes imposed on such person under chapters 21 and 23 of the 
Internal Revenue Code of 1954, or (2) the taxes deducted and withheld 
by such person under chapters 21 and 24 of such Code, the Director 
shall suspend such portion of such payment due to such person, which, 
if possible, is sufficient to satisfy such delinquency, and shall not make 
or enter into any new grant, contract, agreement, loan or other assist- 
ance under this Act with such person until the Secretary of the 
Treasury or his delegate has notified him that such i)erson is no longer 
delinquent in paying or depositing such tax or the Director determines 
that adequate provision has been made for such payment. In order 
to effectuate the purpose of this section on a reasonable basis the 
Secretary of the Treasury and the Director shall consult on a quarterly 
basis. 



25-371 O - 78 



116 

230 

Part B — Coordination 

statement of purpose 

Sec. 630. This part establishes an Economic Opportunity Council, 
provides for an information center, and prescribes certain duties and 
responsibilities. It purpose is to promote better coordination among 
all programs related to this Act, with a view to making those pro- 
grams more effective in reaching and serving the poor, assisting State 
and local agencies to adapt diverse Federal programs to varying local 
problems and conditions, stimulating new and more imaginative ways 
of combining complementary Federal resources in the solution of 
specific problems, and generally improving cooperation and communi- 
cation among all levels of government, agencies, and institutions in 
matters related to the purposes of this Act. 

ECONOMIC OPPORTUNITY COUNCIL 

Sec. 631. (a) There is established, in the Executive Office of the 
President, the Economic Opportunity Council (hereinafter referred 
to as the "Council"), which shall be composed of the Direct and 
the heads of such Federal departments and agencies, such Presidential 
assistants and such other officials of the Federal Government as the 
President may from time to time designate. The President shall desig- 
nate one of the members of the Council to serve as chairman. Each 
member shall designate an alternate to sit in his stead in the event of 
his unavoidable absence. 

(b) It shall be the responsibility of the Council to assist the Presi- 
dent in — 

(1) providing for the coordination of Federal programs and 
activities related to this Act ; 

(2) developing basic policies and setting priorities with respect 
to such programs and activities; 

(3) resolving differences arising among Federal departments 
and agencies with respect to such programs and activities; and 

(4) initiating and arranging for the carrying out of specific 
actions or projects designed to achieve the objectives of this Act. 

(c) The President shall appoint an Executive Secretary of the 
Council. The Executive Secretary is authorized to appoint and fix 
the compensation of -such personnel as may be necessary to assist him 
in the performance of his duties. Employees of other Federal depart- 
ments and agencies may be detailed to the Council from time to time 
to provide temporary assistance. 

(d) To the extent appropriate, a report of the activities of the 
Council shall be included in the annual report of the Director to the 
President and to the Congress, or in a separate report to the Congress. 

(e) From the sums authorized and appropriated to carry out the 
provisions of this title, the President shall reserve such amounts as 
may be necessary to carry out the purposes of this section. 

RESPONSIBILITIES OP THE DIRECTOR 

Sec. 632. In addition to his other powers under this Act, and to 
assist the President in coordinating the antipoverty efforts of all 
Federal agencies, the Director shall — 



i 



117 



231 

(1) undertake special studies of specific coordination problems 
at the request of the President or the Council, or on his own 
initiative ; 

(2) consult with interested agencies and groups, including 
State agencies described in section 231 of this Act and the 
National Advisory Council, with a view to identifying coordina- 
tion problems that may warrant consideration b}^ the Council 
or the President and, to the extent feasible or appropriate, 
initiate action for overcoming those problems, either through the 
Community Services Administration or in conjunction with 
other Federal, State, or local agencies; and 

(3) prepare a five-year national poverty action plan showing 
estimates of Federal and other governmental expenditures, and, 
where feasible, the contributions of the private sector, needed to 
eliminate poverty in this country within alternative periods of 
time. Such plan shall include estimates of the funds necessary to 
finance all relevant programs authorized by this and other Acts, 
and any new programs which may be necessary to eliminate pov- 
erty in this country, and it shall include recommendations for 
such new programs. The plan shall be presented to the Congress 
and updated on an annual basis. 

COOPERATION OF FEDERAL AGENCIES 

Sec. 633. (a) Federal agencies administering programs related to 
this Act shall — 

(1) cooperate with the Director and with the Council in carry- 
ing out their duties and responsibilities; and 

(2) carry out their programs and exercise their functions so as 
to assist in carrying out the provisions and purposes of this Act, 
to the fullest extent permitted by other applicable law. 

(b) The Council and the Director may call upon Federal agencies 
to supply statistical data, program reports, and other materials as 
they deem necessary to discharge their responsibilities under this Act. 

(c) The President may direct that particular programs^ and func- 
tions, including the expenditures of funds, of Federal agencies shall be 
carried out, to the extent not inconsistent with other applicable law, 
in conjunction with or in support of programs authorized under this 
Act. 

COMBINATIONS AMONG PROJECTS AND PROGRAMS 

Sec. 634. In order to encourage efficiencies, close unnecessary serv- 
ice gaps, and generally promote more effective administration, the 
Director shall require, to the fullest extent feasible, that projects or 
programs assisted under this Act be carried on so as to supplement 
one another, or where appropriate other related programs or proj- 
ects, and be included within or otherwise carried on in combination 
with community action programs. In the case of other programs re- 
lated to this Act, the heads of the Federal agencies responsible for 
those programs shall, to the extent permitted by law, similarly pro- 
vide assistance for projects and activities in a manner which encour- 
ages combinations with other related projects and activities where 
appropriate, and with community action programs. The Economic 
Opportunity Council shall, in carrying out its responsibilities under 
this part, make a continuing review of the operation of this section 



118 



232 

with a view to (1) determining particular groups of programs which, 
because of their objectives, or similarities in target groups or areas, 
are especially appropriate for combined or closely coordinated oper- 
ation at the State or local level, and making recommendations accord- 
ingly to the President or appropriate Federal officials; (2) evaluating 
Federal agency procedures for carrying out this section, and de- 
veloping or recommending additional or common procedures, as 
appropriate; and (3) determining whether, and to what extent, con- 
solidations of Federal programs may be justified and making rec- 
ommendations respecting such consolidations to the Director and the 
President. 

INFORMATION CENTER 

Sec. 635. (a) The Director shall establish and operate an informa- 
tion center for the purpose of insuring that maximum use is made 
of Federal programs related to this Act and that information concern- 
ing those programs and other relevant information is readily available 
to public officials and other interested persons. The Director shall col- 
lect, prepare, analyze, correlate, and distribute information as de- 
scribed above, either free of charge or by sale at cost (any funds so 
received to be deposited to the Director's account as an offset of that 
cost), and may make arrangements and pay for any printing and bind- 
ing without regard to the provisions of any other law or regulations. 
In connection with operation of the center, the Director may carry on 
research or studies concerning the improvement of information systems 
in support of the purposes of this Act, the adequacy of existing data, 
ways in which data generated on the State and local level may be 
incorporated into Federal information systems, and methods by which 
data may be made more readily available to State and local officials or 
used to further coordination objectives. 

(b) The Director shall publish and maintain on a current basis, 
a catalog of Federal programs relating to individual and community 
improvement. He may also make grants, from funds appropriated 
to carry out title II of this Act, to States and communities to estabUsh 
information service centers on the collection, correlation, and distribu- 
tion of information required to further the purposes of this Act. 

(c) In order to assure that all appropriate officials are kept fully 
informed of programs related to this Act, and that maximum use is 
made of those programs, the Director shall establish procedures to 
assure prompt distribution to State and local agencies of all current 
information, including administrative rules, regulations, and guide- 
lines, required by those agencies for the effective performance of their 
responsibilities. 

PROHIBITION 

Sec. 636. In order to assure that existing Federal agencies are used 
to the fullest extent possible in carrying out the purposes of this Act, 
no funds appropriated to carry out this Act shall be used to establish 
any new department or office when the intended function is being 
performed by an existing department or office. 

SPECIAL responsibilities: TRAINING PROGRAMS 

Sec. 637. (a) It shall be the responsibility of the Director, the 
Secretary of Labor, the Secretary of Health, Education, and Welfare, 



119 



233 

and the heads of all other departments and agencies concerned, acting 
through such procedures or mechanisms as the President may pre- 
scribe, to provide for, and take such steps as may be necessary and 
appropriate to implement, the effective coordination of all programs 
and activities within the executive branch of the Government relating 
to the training of individuals for the purpose of improving or restoring 
employability. 

(b) The Secretary of Labor, pursuant to such agreements as may 
be necessary or appropriate (which may include arrangements for 
reimbursement) shall — 

(1) be responsible for assuring that the Federal-State employ- 
ment service provides and develops its capacity for providing 
maximum support for the programs described in subsection (a) ; 
and 

(2) obtain from the Secretary of Commerce, .the Secretary of 
Health, Education, and Welfare, the Director of the Community 
Services Administration, and the head of any other Federal 
agency administering a training program, such employment in- 
formation as will facilitate the placement of individuals being 
trained. 

DEFINITIONS 

Sec. 638. As used in this part, "programs related to this Act" and 
"coordination" shall include the programs and action described in this 
section : 

(1) "Programs related to this Act" include programs under 
this Act and all Federal or federally assisted programs which 
have objectives which are, in whole or substantial part, comple- 
mentary to the purposes of this Act, or which provide resources 
which may be used in combination with resources under this Act 
to assist in achieving any of the purposes of this Act. 

(2) "Coordination" includes, but is not limited to — 

(A) actions to improve the common effectiveness of pro- 
grams in reaching and serving the poor, such as actions: to 
extend services to new areas, provide them in a common place, 
or structure them so that they are more readily accepted or 
widely utilized ; to eliminate procedures or requirements that 
may be inappropriate for or result in unnecessary hardship 
to disadvantaged persons with limited education or other 
special handicaps; to establish common eligibility standards 
among programs serving substantially similar groups or op- 
erating in the same areas; or to develop methods of operation 
or administration that will provide new employment incen- 
tives or opportunities for the poor; 

(B) actions to promote better use at the State or local level 
of Federal assistance available under diverse programs, such 
as actions to establish procedures for cooperation among State 
or local agencies seeking assistance from different Federal 
sources with a view to eliminating unnecessary duplication 
and service gaps and promoting common or complementary 
priorities; or to modify or improve technical or administra- 
tive requirements imposed by different Federal agencies that 
may operate to increase unnecessarily the burdens of State or 
local agencies, minimize their opportunities for the imagina- 



120 



234 

tive use of Federal assistance, or discourage their cooperation 
with one another; 

(C) actions to promote simpUfication and efficiencies 
through the joint or combined use of Federal resources, such 
as actions to develop new methods of processing requests for 
assistance or granting assistance that will enable Federal 
agencies more generally to use resources jointly in support of 
common objectives; to establish common ])riorities for pur- 
poses of program planning, research and demonstration 
activities; and to effect combinations among or redirect 
Federal programs or activities for the purpose of eliminating 
unnecessary duplication; 

(D) actions to improve communication and general coop- 
eration, such as actions to strengthen ties among regional 
offices of different Federal agencies and among such offices 
and other regional agencies or organizations; to develop and 
improve procedures by which Federal agencies may act 
together in promulgating or making available items of 
information, including information as to the availability and 
allocation of funds, which are closely related to one another 
for purposes of State or local planning and budgeting; or to 
develop procedures by which State and local agencies may be 
afforded new opportunities to participate in Federal policy 
decisions, including decisions on recommended legislation, 
affecting their capacity to operate efficiently and effectively. 

TITLE VII— COMMUNITY ECONOMIC DEVELOPMENT 

STATEMENT OF PURPOSE 

Sec. 701. The purpose of this title is to encourage the development 
of special programs by which the residents of urban and rural low- 
income areas may, through self-help and mobilization of the com- 
munity at large, with appropriate. Federal assistance, improve the 
quality of their economic and social participation in community life 
in such a way as to contribute to the elimination of poverty and the 
establishment of permanent economic and social benefits. 

definition 

Sec. 702. As used in this title the term ''community development 
corporation" means a nonprofit organization responsible to residents 
of the area it serves which is receiving financial assistance under part 
A of this title and any organization more than 50 per centum of which 
is owned by such an organization, or otherwise controlled by such 
an organization, or designated by such an organization for the purpose 
of this title. 

AUTHORIZATION OF APPROPRIATIONS 

Sec. 703. For the purpose of carrying out this title, there- are 
authorized to be appropriated $39,000,000 and such additional sums 
as may be necessary for fiscal year 1975 and such sums as may be 
necessary for each of the two succeeding fiscal years. 



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235 
Part A — Urban and Rural Special Impact Programs 

STATEMENT OF PURPOSE 

Sec. 711. The purpose of this part is to establish special programs 
of assistance to nonprofit private locally initiated community devel- 
opment corporations which (1) are directed to the solution of the 
critical problems existing in particular communities or neighborhoods 
(defined without regard to political or other subdivisions or bound- 
aries) within those urban and rural areas having concentrations or 
substantial numbers of low-income persons; (2) are of sufficient size, 
scope, and duration to have an appreciable impact in such commu- 
nities, neighborhoods, and rural areas in arresting tendencies toward 
dependency, chronic unemployment, and community deterioration; (3) 
hold forth the prospect of continuing to have such impact after the 
termination of financial assistance under this part, and (4) provide 
financial and other assistance to start, expand, or locate enterprises 
in or near the area to be served so as to provide employment and 
ownership opportunities for residents of such areas, including those 
who are disadvantaged in the labor market because of their limited 
speaking, reading, and writing abilities in the English language. 

ESTABLISHMENT AND SCOPE OF PROGRAMS 

Sec. 712. (a) The Director is authorized to provide financial assist- 
ance in the form of grants to nonprofit and for profit community 
development corporations and other affiliated and supportive agencies 
and organizations associated with qualifying community development 
corporations for the payment of all or part of the cost of programs 
which are designed to carry out the purposes of this part. Financial 
assistance shall be provided so that each community economic devel- 
opment program is of sufiicient size, scope, and duration to have an 
appreciable impact on the area served. Such programs may include — 

(1) community economic and business development programs, 
including but not limited to: (A) programs which provide finan- 
cial and other assistance (including equity capital) to start, 
expand, or locate businesses in or near the area served so as to 
provide employment and ownership opportunities for residents of 
such areas, and (B) programs for small businesses located in or 
owned by residents of such areas ; 

(2) communit}^ development programs, including industrial 
parks and housing activities, which contribute to an improved 
environment and which create new training, employment, and 
ownership opportunities for residents of such area; 

(3) training and public service employment programs and 
related services for unemployed or low-income persons which 
support and complement community development programs 
financed under this part, including, without limitation, activities 
such as those described in the Comprehensive Employment and 
Training Act of 1973; and 

(4) social service programs which support and complement 
community economic development programs financed under this 
part, including but not Umited to child care, educational services, 
health services, credit counseling, energy conservation, and pro- 
grams for the maintenance of housing facilities. 



122 



236 

(b) The Director shall conduct programs assisted under this part 
so as to contribute, on an equitable bavsis between urban and rural 
areas, to the elimination of poverty and the establishment of perma- 
nent economic and social benefits in such areas. 

FINANCIAL ASSISTANCE REQUIREMENTS 

Sec. 713. (a) The Director, under such regulations as he may 
estabUsh, shall not provide financial assistance for any community 
economic development program under this part unless he determines 
that — 

(1) such community development corporation is responsible 
to residents of the area served (i) through a governing body not 
less than 50 per centum of the members of which are area residents 
and (ii) in accordance with such other guidelines as may be estab- 
lished by the Director, except that the composition of the govern- 
ing bodies of organizations owned or controlled by the community 
development corporation need not be subject to such residency 
requirement ; 

(2) the program will be appropriately coordinated with local 
planning under this title, with housing and community develop- 
ment programs, with employment and training programs, and 
with other relevant planning for physical and human resources 
in the areas served ; 

(3) adequate technical assistance is made available and com- 
mitted to the programs being supported; 

(4) such financial assistance will materially further the pur- 
poses of this part; 

(5) the applicant is fulfilling or will fulfill a need for services, 
supplies, or facilities which is otherwise not being met; 

(6) all projects and related facilities will, to the maximum 
feasible extent, be located in the areas served ; 

(7) projects will, where feasible, promote the development of 
entrepreneurial and management skills and the ownership or 
participation in ownership of assisted businesses and housing, 
cooperatively or otherwise, by residents of the area served; 

(8) projects will be planned and carried out with the fullest 
possible participation of resident or local businessmen and rep- 
resentatives of financial institutions, including participation 
through contract, joint venture, partnership, stock ownership or 
membership on the governing boards or advisory councils of such 
projects consistent with the self-help purposes of this title; 

(9) no participant will be employed on projects involving 
political parties, or the construction, operation, or maintenance 
of so much of any facility as is used or to be used for sectarian 
instruction or as a place for religious worship ; 

(10) the program will not result in the displacement of em- 
ployed workers or impair existing contracts for services, or result 
in the substitution of Federal or other funds in connection with 
work that would otherwise be performed; 

(11) the rates of pay for time spent in work-training and edu- 
cation, and other conditions of employment, will be appropriate 
and reasonable in the light of such factors as the type of work, 
geographical region, and proficiency of the participant; 



123 



237 

(12) the program will, to the maximum extent feasible, con- 
tribute to the occupational development or upward mobility of 
individual participants; 

(13) preference will be given to low-income or economically 
disadvantaged residents of the areas served in filling jobs and 
training opportunities ; and 

(14) training programs carried out in connection with projects 
financed under this part shall be designed wherever feasible to 
provide those persons who successfully complete such training 
v^dth skills which are also in demand in communities, neighbor- 
hoods, or rural areas other than those for which programs are 
established under this part. 

(b) Financial assistance under this section shall not be extended 
to assist in the relocation of establishments from one location to 
another if such relocation would result in an increase in unemploy- 
ment in the area of original location. 

(c) The level of financial assistance for related purposes under 
this Act, or any other program for Federal financial assistance, to the 
area served by a special impact program shall not be diminished in 
order to substitute funds authorized by this part. 

FEDERAL SHARE OF PROGRAM COSTS 

Sec. 714. Federal assistance to any program carried out pursuant 
to this part, including grants used by community development cor- 
porations for capital improvements, shall (1) not exceed 90 per centum 
of the cost of such program including costs of administration unless 
the Director determines that the assistance in excess of such percent- 
age is required in furtherance of the purposes of this part, and (2) 
be made available for deposit to the order of the grantee, under condi- 
tions which the Director deems appropriate, within thirty days fol- 
lowing approval of the grant agreement by the Director and such 
grantee of the grant agreement. Non-Federal contributions may be in 
cash or in kind, fairly evaluated, including but not limited to plant, 
equipment, and services. Capital investments made with funds granted 
as a result of the Federal share of the costs of programs carried out 
under this title, and the proceeds from such capital investments, shall 
not be considered Federal property. Upon investment, title vests 
in the community development corporation. The Federal Government 
retains the right to direct that on severance of the grant relationship 
the assets purchased with grant funds shall continue to be used for 
the original purpose for which they were granted. 

Part B — Special Rural Programs' 

statement of purpose 

Sec. 721. It is the purpose of this part to meet the special economic 
needs of rural communities or areas with concentrations or substantial 
numbers of low-income persons by providing support to self-help 
programs which promote economic development and independence, as 
a supplement to existing similar programs conducted by other depart- 
ments and agencies of the Federal Government. Such programs should 



124 



238 

encourage low-income families to pool their talents and resources so 
as to create and expand rural economic enterprise. 

FINANCIAL ASSISTANCE 

Sec. 722. (a) The Director is authorized to provide financial assist- 
ance, including loans having a maximum maturity of 15 years and in 
amounts not resulting in an aggregate principal indebtedness of more 
that $3,500 at any one time, to any low-income rural family where, 
in the judgment of the Director, such financial assistance has a rea- 
sonable possibility of effecting a permanent increase in the income of 
such families, or will contribute to the improvement of their living or 
housing conditions, by assisting or permitting them to — 

(1) acquire or improve real estate or reduce encumbrances or 
erect improvements thereon; 

(2) operate or improve the operation of farms not larger than 
family sized, including but not limited to the purchase of feed, 
seed, fertilizer, livestock, poultry, and equipment; or 

(3) participate in cooperative associations, or to finance non- 
agricultural enterprises which will enable such families to supple- 
ment their income. 

(b) The Director is authorized to provide financial assistance to 
local cooperative associations in rural areas containing concentra- 
tions or substantial numbers of low-income persons for the purpose 
of defraying all or part of the costs of establishing and operating 
cooperative programs for farming, purchasing, marketing, process- 
ing, and to improve their income as producers and their purchasing 
power as consumers, and to provide such essentials as credit and health 
services. Costs which may be defrayed shall include but not be limited 
to— 

(1) administrative costs of staff and overhead; 

(2) costs of planning and develo])ing new enterprises; 

(3) costs of acquiring technical assistance; and 

(4) initial capital where it is determined by the Director that 
the poverty of the families participating in the program and the 
social conditions of the rural area require such assistance. 

LIMITATION ON ASSISTANCE 

Sec. 723. (a) No financial assistance shall be provided under this 
part unless the Director determines that — 

(1) any cooperative association receiving assistance has a 
minimum of fifteen active members, a majority of which are low- 
income rural persons ; 

(2) adequate technical assistance is made available and com- 
mitted to the programs being supported ; 

(3) such financial assistance will materially further the pur- 
poses of this part; and 

(4) the applicant is fulfilling or will fulfill a need for services, 
supplies, or facilities which is otherwise not being met. 

(b) The level of financial assistance for related purposes under this 
Act to the area served by a program under this part shall not be di- 
minished in order to substitute funds authorized by this part. 



125 



239 

Part C — Development Loans to Community Economic 
Development Programs 

development loan fund 

Sec. 731. (a) The Director is authorized to make or guanantee loans 
(either directly or in cooperation with banks or other organizations 
through agreements to participate on an immediate or deferred basis) 
to community development corporations, and families and local 
cooperatives eligible for financial assistance under this title, for busi- 
ness housing, and community development projects which the Director 
determines will carry out the purposes of this part. No loans, guar- 
antees, or other financial assistance shall be provided under this section 
unless the Director determines that — 

(1) there is reasonable assurance of repayment of the loan; 

(2) the loan is not otherwise available on reasonable terms from 
private sources or other Federal, State, or local programs; and 

(3) the amount of the loan, together with other funds avail- 
able, is adequate to assure completion of the project or achieve- 
ment of the purposes for which the loan is made. 

Loans made by the Director pursuant to this section shall bear 
interest at a rate not less than a rate determined by the Secretary of 
the Treasury taking into consideration the average market yield on 
outstanding Treasury obligations of comparable maturity, plus such 
additional charge if any, toward covering other costs of the program 
as the Director may determine to be consistent with its purposes, 
except that, for the five years following the date in which funds are 
initially available to the borrower, the rate of interest shall be set 
at a rate considered appropriate by the Director in light of the par- 
ticular needs of the borrower which rate shall not be lower than 1 per 
centum. All such loans shall be repayable within a period of not more 
than thirty years. 

(b) The Director is authorized to adjust interest rates, grant mora- 
toriums or repayment of principal and interest, collect or compro- 
mise any obligations held by him, and to take such other actions in 
respect to such loans as he shall determine to be necessary or appro- 
priate, consistent with the purposes of this section. 

(c)(1) To carry out the lending and guaranty functions author- 
ized under this part, there shall be established a Development Loan 
Fund consisting of two separate accounts, one of which shall be a 
revolving fund called the Rural Development Loan Fund and the 
other of which shall be a revolving fund called the Community Devel- 
opment Loan Fund. The capital of each such revolving fund shall 
remain available until expended. 

(2) The Rural Development Loan Fund shall consist of the remain- 
ing funds provided for in part A of title III of this Act and such 
amounts as may be deposited in such Fund by the Director out of funds 
made available from appropriations for the purposes of carrying out 
this part. The Director shall utilize the services of the Farmers Home 
Administration in administering the Fund. 

(3) The Community Development Loan Fund shall consist of such 
amounts as may be deposited in such funds by the Director out of 
funds made available from appropriations for the purpose of carry- 
ing out this title. The Director may make deposits in the Com- 



126 



240 



munity Development Loan Fund in any fiscal year in which he has 
made available for grants to community development corporations 
under this title not less than $60,000,000 out of funds made available 
from appropriations for the purpose of carrying out this title. 

ESTABLISHMENT OF MODEL COMMUNITY ECONOMIC DEVELOPMENT 
FINANCE CORPORATION 

Sec. 732. (a) To the extent he deems appropriate, the Director shall 
utilize funds available under this part to prepare a plan of action for 
the establishment of a Model Community Economic Development 
Finance Corporation to provide a user-controlled independent and 
professionally operated long-term financing vehicle with the principal 
purpose of providing financial support for community economic devel- 
opment corporations, cooperatives, other afl^iated and supportive 
agencies and organizations associated with community economic devel- 
opment corporations, and other entities eligible for assistance under 
this title. 

(b) Not later than June 1, 1975, the Director shall submit to the 
appropriate committees of the Congress the plan required by this 
section. 

Part D — Supportive Programs and Activities 

TRAINING and TECHNICAL ASSISTANCE 

Sec. 741. (a) The Director shall provide, directly or through 
grants, contracts or other arrangements, such technical assistance 
and training of personnel as may be required to effectively implement 
the purposes of this title. No financial assistance shall be provided to 
any public or private organization under this section unless the 
Director provides the beneficiaries of these services with opportunity 
to participate in the selection of and to review the quality and utility 
of the services furnished them by such organization. 

(b) Technical assistance to community development corporations 
and both urban and rural cooperatives may include planning, manage- 
ment, legal assistance or support preparation of feasibility studies, 
product development, marketing, and the provisions of stipends to 
encourage skilled professionals to engage in full-time activities under 
the direction of a community organization financially assisted under 
this title. 

(c) Training for employees of community development corpora- 
tions and for employees and members of urban rural cooperatives 
shall include, but not be limited to, on-the-job training, classroom 
instruction, and scholarships to assist them in development, manage- 
rial, entrepreneurial, planning, and other technical and organizational 
skills which will contribute to the effectiveness of programs assisted 
under this title. 

APPLICATIONS OF OTHER FEDERAL RESOURCES — SMALL BUSINESS ADMIN- 
ISTRATION AND DEPARTMENT OF COMMERCE PROGRAMS 

Sec 742. (a)(1) Funds granted under this title which are invested 
directly or indirectly in a small business investment company, local 
development company, limited small business investment company, 
or small business investment company licensee under section 301(d) 



127 



241 

of the Small Business Investment Act of 1958 shall be mcluded as 
"private paid-in capital and paid-in surplus," "combined paid-in 
capital and paid- n surplus,' and 'paid-in capital" for purposes of 
sections 302, 303, and 502, respectively, of the Small Business 
Investment Act of 1958. 

(2) Within ninety days of the enactment of this title, the Admin- 
istrator of the Small Business Administration, after consultation with 
the Director, shall prescribe such regulations as may be necessary and 
appropriate to insure the availability to community development cor- 
porations of such programs as shall further the purposes of this title. 

(b) (1) Areas selected for assistance under this title shall be deemed 
"redevelopment areas" within the meaning of section 401 of the Public 
Works and Economic Development Act of 1965, shall qualify for 
assistance under the provisions of title I and title II of that Act, and 
shall be deemed to have met the overall economic development pro- 
gram requirements of section 202(b) (10) of such Act. 

(2) Within ninety days of the enactment of this title, the Secre- 
tary of Commerce shall prescribe regulations which will insure that 
community development corporations and cooperatives shall qualify 
for assistance and shall be eligible to receive such assistance under all 
such programs of the Economic Development Administration as shall 
further the purposes of this title. 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PROGRAMS 

Sec. 743. The Secretary of Housing and Urban Development, after 
consultation with the Director, shall take all necessary steps to assist 
community development corporations and local cooperative associa- 
tions to qualify for and receive (1) such assistance in connection with 
technical assistance, counseling to tenants and homeowners, and loans 
to sponsors of low- and moderate-income housing under section 106 
of the Housing and Urban Development Act of 1968 as amended by 
section 811 of the Housing and Community Development Act of 1974, 

(2) such land for housing and business location and expansion under 
title I of the Housing and Community Development Act of 1974, and 

(3) such funds for comprehensive planning under section 701 of the 
Housing Act of 1954 as amended by section 401 of the Housing and 
Community Development Act of 1974, as shall further the purposes 
of this title. 

DEPARTMENT OF AGRICULTURE AND FARMERS HOME ADMINISTRATION 

PROGRAMS 

Sec. 744. The Secretary of Agriculture or, where appropriate, 
the Administrator of the Farmers Home Administration, after con- 
sultation with the Director, shall take all necessary steps to insure that 
community development corporations and local cooperative associa- 
tions shall qualify for and shall receive (1) such assistance in con- 
nection with housing development under the Housing Act of 1949, 
as amended, (2) such assistance in connection with housing, business, 
industrial, and community development under the Consolidated 
Farmers Home Administration Act of 1961 and the Rural Develop- 
ment Act of 1972, and (3) such further assistance under all such 
programs of the United States Department of Agriculture, as shall 
further the purposes of this title. 



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REPORT ON OTHER FEDERAL RESOURCES 

Sec. 745. On or before six months after the enactment of this title, 
and annually thereafter, the Director shall submit to the Congress a 
detailed report setting forth a description of all Federal agency 
programs which he finds relevant to achieving the purposes of this 
title and the extent to which such programs have been made available 
to community development corporations receiving financial assistance 
under this title including specifically the availability and effectiveness 
of programs referred to in sections 742, 743, and 744 of this title. Where 
appropriate, the report required under this subsection also shall 
contain recommendations for the more effective utilization of Federal 
agency programs for carrying out the purposes of this title. 

COORDINATION AND ELIGIBILITY 

Sec. 746. (a) The Director shall take all necessary and appropriate 
steps to encourage Federal departments and agencies and State and 
local governments to make grants, provide technical assistance, enter 
into contracts, and generally support and cooperate with community 
development corporations and local cooperative associations. 

(b) Eligibility for assistance under Federal programs shall not 
be denied to any applicant on the ground that it is a community de- 
velopment corporation or any other entity assisted under this title. 

EVALUATION AND RESEARCH 

Sec. 747. (a) Each program for which grants are made under this 
title shall provide for a thorough evaluation of the effectiveness of the 
program in achieving its purposes, which evaluation shall be conducted 
by such public or private organizations as the Director, in consultation 
with existing grantees familiar with programs carried out under this 
Act, may designate, and all or part of the costs of evaluation may be 
paid from funds appropriated to carry out this part. In evaluating 
the performance of any community development corporation funded 
under part A of this title, the criteria for evaluation shall be based 
upon such program objectives, goals, and priorities as are consistent 
with the purposes of this title and were set forth by such community 
development corporation in its proposal for funding as approved and 
agreed upon by the Director or as subsequently modified from time to 
time by mutual agreement between the Director and such community 
development corporation. 

(b) The Director shall conduct, either directly or through grants 
or other arrangements, research designed to suggest new programs 
and policies to achieve the purposes of this title in such ways as to pro- 
vide opportunities for employment, ownership, and a better quality of 
lifp. for low-income residents. 

PLANNING GRANTS 

Sec. 748. In order to facilitate the purposes of this title, the Direc- 
tor is authorized to provide financial assistance to any public or private 
nonprofit agency or organization for planning of community economic 
development programs and cooperative programs under this title. 



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NONDISCRIMINATION PROVISIONS 

Sec. 749. (a) The Director shall not provide financial assistance for 
any program, project, or activity under this title unless the grant or 
contract with respect thereto specifically provides that no person with 
responsibilities in the operation thereof will discriminate wdth respect 
to any such program, project, or activity because of race, creed, color, 
national origin, sex, political afiiliation, or beliefs. 

(b) No person in the United States shall on the ground of sex be 
excluded from participation in, be denied the benefits of, be subjected 
to discrimination under, or be denied employment in connection with 
any program or activity receiving assistance under this title. The 
Director shall enforce the provisions of the preceding sentence in 
accordance with section 602 of the Civil Rights Act of 1964. Section 
603 of such Act shall apply with respect to any action taken by the 
Secretary to enforce such sentence. This section shall not be construed 
as affecting any other legal remedy that a person may have if that 
person is excluded from participation in, denied the benefits of, sub- 
jected to discrimination under, or denied employment in connection 
with, any program, project, or activity receiving assistance under 
this title. 

TITLE VIII— NATIVE AMERICAN PROGRAMS 

SHORT TITLE 

Sec. 801. This title may be cited as the "Native American Programs 
Act of 1974". 

STATEMENT OF PURPOSE 

Sec. 802. The purpose of this title is to promote the goal of eco- 
nomic and social self-sufficiency for American Indians, Hawaiian 
Natives and Alaskan Natives. 

FINANCIAL ASSISTANCE FOR NATIVE AMERICAN PROJECTS 

Sec 803. (a) The Secretary is authorized to provide financial assist- 
ance to public and nonprofit private agencies, including but not limited 
to, governing bodies of Indian tribes on Federal and State reserva- 
tions, Alaskan Native villages and regional corporations established 
by the Alaska Native Claims Settlement Act, and such public and 
nonprofit private agencies serving Hawaiian Natives, and Indian 
organizations in urban or rural nonreservation areas, for projects per- 
taining to the purposes of this title. In determining the projects to be 
assisted under this title, the Secretary shall consult with other Federal 
agencies for the purpose of eliminating duplication or conflict among 
similar activities or projects and for the purpose of determining 
whether the findings resulting from those projects may be incorporated 
into one or more programs for which those agencies are responsible. 

(b) Financial assistance extended to an agency ucder this title 
shall not exceed 80 per centum of the approved costs of the assisted 
project, except that the Secretary may approve assistance in excess 
of such percentage if he determines, in accordance with regulatioDS 
estabUshing objective criteria, that such action is required in further- 
ance of the purposes of this title. Non-Federal contributions may be 
in cash or in kind, fairly evaluated, including but not limited to plant, 



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equipment, and services. The Secretary shall not require non-Federal 
contributions in excess of 20 per centum of the approved costs of 
programs or activities assisted under this title. 

(c) No project shall be approved for assistance under this title 
unless the Secretary is satisfied that the activities to be carried out 
under such project will be in addition to, and not in substitution for, 
comparable activities previously carried out without Federal assist- 
ance, except that the Secretary may waive this requirement in any 
case in which he determines, in accordance with regulations establish- 
ing objective criteria, that application of the requirement would 
result in unnecessary hardship or otherwise be inconsistent with the 
purposes of this title. 

TECHNICAL ASSLSTANCE AND TRAINING 

Sec. 804. The Secretary may provide, directly or through other 
arrangements, (1) technical assistance to public and private agencies 
in developing, conducting, and administering projects under this 
title, and (2) short-term m-service training for specialized or other 
personnel which is needed in connection with projects receiving 
financial assistance under this title. 

RESEARCH, DEMONSTRATION, AND PLLOT PROJECTS 

Sec. 805. (a) The Secretary may provide financial assistance 
through grants or contracts for research, demonstration, or pilot 
projects conducted by public or private agencies which are designed 
to test or assist in the development of new approaches or methods 
that will aid in overcoming special problems or otherwise furthering 
the purposes of this title. 

(b) The Secretary shall establish an overall plan to govern the 
approval of research, demonstration, and pilot projects and the use 
of all research authority under this title. The plan shall set forth 
specific objectives to be achieved and priorities among such objectives. 

ANNOUNCEMENT OF RESEARCH, DEMONSTRATION, OR PILOT PROJECTS 

Sec. 806. (a) The Secretary shall make a public annoimcement 
concerning — 

(1) the title, purpose, intended completion date, identity of 
the grantee or contractor, and proposed cost of any grant or 
contract with a private or non-Federal public agency for a re- 
search, demonstration, or pilot project; and 

(2) except in cases in which the Secretary determines that 
it would not be consistent with the purposes of this title, the 
results, findings, data, or recommendations made or reported as 
a result of sucn activities. 

(b) The public announcements required by subsection (a) shall 
be made within thirty days of making such grants or contracts, and 
the public announcements required by subsection (b) of this section 
shall be made within thirty days of the receipt of such results. 



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SUBMISSION OF PLANS TO STATE AND LOCAL OFFICIALS 

Sec. 807. (a) No financial assistance may be provided to any project 
under section 803 of this title or any research, demonstration, or pilot 
project under section 805 of this title, which is to be carried out on 
or in an Indian reservation or Alaskan Native village, unless a plan 
setting forth the project has been submitted to the governing body of 
that reservation or village and the plan has not been disapproved 
by the governing body within thirty days of its submission 

(b) No financial assistance may be provided to any project under 
section 803 of this title or any research, demonstration, or pilot project 
under section 805 of this title, which is to be carried out in a State 
other than on or in an Indian reservation oi Alaskan Native village 
or Hawaiian Homestead, unless the Secretary has notified the chief 
executive officer of the State of his decision to provide that assistance. 

(c) No financial assistance may be provided to any project under 
section 803 of this title or any research, demonstration, or pilot project 
under section 805 of this title, which is to be carried out in a city, 
county, or other major political subdivision of a State, other than 
on or in an Indian reservation or Alaskan Native village, or Hawaiian 
Homestead, unless the Secretary has notified the local governing 
officials of the political subdivision of his decision to provide that 
assistance. 

RECORDS AND AUDITS 

Sec. 808. (a) Each agency which receives financial assistance under 
this title shall keep such records as the Secretary may prescribe, 
including records which fully disclose the amount and disposition by 
that agency of such financial assistance, the total cost of the project 
in connection with which such financial assistance is given or used, 
the amount of that portion of the co&t of the project supplied by other 
sources, and such other records as will facilitate an effective audit. 

(b) The Secretary and the Comptroller General of the United 
States, or any of their duly authorized representatives, shall have 
access for the purpose of audit and examination to any books, docu- 
ments, papers, and records of any agency which receives financial 
assistance under this title that are pertinent to the financial assistance 
received under this title. 

APPEALS, NOTICE, AND HEARING 

Sec. 809. The Secretary shall prescribe procedures to assure that — 

(1) financial assistance under this title shall not be suspended, 
except in emergency situations, unless the assisted agency has 
been given reasonable notice and opportunity to show cause why 
such action should not be taken ; and 

(2) financial assistance under this title shall not be termi- 
nated, and application for refunding shall not be denied, and a 
suspension of financial assistance shall not be continued for longer 
than thirty days, unless the assisted agency has been afforded 
reasonable notice and opportunity for a full and fair hearing. 

EVALUATION 

Sec. 810. (a) The Secretary shall provide, directly or through 
grants or contracts, for the evaluation of projects assisted under this 

25-371 O - 78 - 10 



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title, including evaluations that describe and measure the impact of 
such projects, their effectiveness in achieving stated goals, their impact 
on related programs, and their structure and mechanisms for delivery 
of services, including, where appropriate, comparisons with appropri- 
ate control groups composed of persons who have not participated in 
such projects. Evaluations shall be conducted by persons not directly 
involved in the administration of the program or project evaluated. 

(b) Prior to obligating funds for the programs and projects covered 
by this title with respect to fiscal year 1976, the Secretary shall develop 
and publish general standards for evaluation of program and project 
effectiveness in achieving the objectives of this title. The extent to 
which such standards have been met shall be considered in deciding 
whether to renew or supplement financial assistance authorized under 
this title. 

(c) In carrying out evaluations under this title, the Secretary may 
require agencies which receive assistance under this title to provide for 
independent evaluations. 

(d) In carrying out evaluations under this title, the Secretary 
shall, whenever feasible, arrange to obtain the specific views of persons 
participating in and served by programs and projects assisted under 
this title about such programs and projects. 

(e) The Secretary shall publish the results of evaluative research 
and summaries of evaluations of program and project impact and 
effectiveness not later than ninety days after the completion thereof. 
The Secretary shall submit to the appropriate committees of the Con- 
gress copies of all such research studies and evaluation summaries. 

(f) The Secretary shall take the necessary action to assure that all 
studies, evaluations, proposals, and data produced or developed with 
assistance under this title shall become the property of the United 
States. 

LABOR STANDARDS 

Sec. 811. All laborers and mechanics employed by contractors or 
subcontractors in the construction, alteration, or repair, including 
painting or decorating, of buildings or other facilities in connection 
with projects assisted under this title, shall be paid wages at rates not 
less than those prevailing on similar construction in the locality, as 
determined by the Secretary of Labor in accordance with the Davis- 
Bacon Act. The Secretary of Labor shall have, with respect to such 
labor standards, the authority and functions set forth in Reorganiza- 
tion Plan Numbered 14 of 1950, and section 2 of the Act of June 1, 
1934. 

DELEGATION OF AUTHORITY 

Sec. 812. (a) The Secretary is authorized to delegate to the heads 
of other departments and agencies of the Federal Government any of 
his functions, powers, and duties under this title, as he may deem 
appropriate, and to authorize the redelegation of such functions, pow- 
ers, and duties by the heads of such departments and agencies. 

(b) Departments and agencies of the Federal Government shall 
exercise their powers, duties, and functions in such manner as will 
assist in carrying out the objectives of this title. 

(c) Funds appropriated for the purposes of carrying out this title 
may be transferred between departments and agencies of the Gov- 
ernment, if such funds are used for the purposes for which they are 
authorized and appropriated. 



133 



247 

DEFINITIONS 

Sec. 813. As used in this title, the term — 

(1) "financial assistance" includes assistance advanced by 
grant, agreement, or contract, but does not include the procure- 
ment of plant or equipment, or goods or services ; 

(2) "Indian reservation or Alaskan Native village" includes the 
reservation of any federally or State recognized Indian tribe, 
including any band, nation, pueblo, or rancheria, any former 
reservation in Oklahoma, any community under the jurisdiction 
of an Indian tribe, including a band, nation, pueblo, or rancheria, 
with allotted lands or lands subject to a restriction against aliena- 
tion imposed by the United States or a State, and any lands of or 
under the jurisdiction of an Alaskan Native village or group, 
including any lands selected by Alaskan Natives or Alaskan 
Native organizations under the Alaska Native Claims Settlement 
Act; 

(3) "Native Hawaiian" means any individual any of whose 
ancestors were natives of the area which consists of the Hawaiian 
Islands prior to 1778. 

AUTHORIZATION OF APPROPRIATIONS 

Sec. 814. There are authorized to be appropriated for the purpose 
of carrying out the provisions of this title, such sums as may be neces- 
sary for fiscal years 1975 through 1977. 

TITLE IX— EVALUATION 

PROGRAM AND PROJECT EVALUATION 

Sec. 901. (a)(1) The Director shall, directly or through grants or 
contracts, measure and evaluate the impact of all programs authorized 
by this Act and of poverty-related programs authorized b}^ other Acts, 
in order to determine their effectiveness in achieving stated goals, 
their impact on related programs, and their structure and mechanisms 
for delivery of services, including where appropriate, comparisons 
with appropriate control groups composed of persons who have not 
participated in such programs. Evaluations shall be conducted by per- 
sons not directly involved in the administration of the program or 
project evaluated. 

(2) In carrying out his responsibilities under this section, the 
Director, in the case of research, demonstrations, and related activities 
carried out under title I of this Act, shall, after taking into considera- 
tion the views of State agencies and community action agencies des- 
ignated pursuant to section 210 of this Act, on an annual basis — 

(A) reassess priorities to which such activities should be 
directed; and 

(B) review present research, demonstration, and related activ- 
ities to determine, in terms of the purpose specified for such 
activities in section 102(a) of this Act, whether and on what basis 
such activities should be continued, revised, or terminated. 



134 



248 

(3) The Director shall, within 12 months after the date of enact- 
ment of this Act, and on each April 1 thereafter, prepare and furnish 
to the appropriate committees of the Congress a complete report on 
the determination and review carried out under paragraph (2) of 
this subsection, together with such recommendations, including any 
recommendations fo; additional legislation, as he deems appropriate. 

(b) Prior to obligating funds for the programs and projects covered 
by this Act with respect to fiscal year 1976, the Director shall de- 
velop and publish gtieral standards for evaluation of program 
and project effectiveness in achieving the objectives of this Act. The 
extent to which such standards have been met shall be considered in 
deciding whether to renew or supplement financial assistance author- 
ized under any section of this Act. Reports submitted pursuant to sec- 
tion 608 of this Act shall describe the actions taken as a result of these 
evaluations. 

(c) In carrj'ing out evaluations under this title, the Director shall, 
whenever feasible, arrange to obtain the specific views of persons 
participating in and served by programs and projects assisted under 
this Act about such programs and projects, and shall consult, when 
appropriate, with State agencies and community action agencies 
designated pursuant to section 210, in order to provide for jointly 
sponsored objective evaluation studies on a State or areawide basis. 

(d) The Director shall publish the results of evaluative research 
and summaries of evaluations of program and project impact and 
effectiveness not later than ninety days after the completion thereof. 
The Director shall submit to the appropriate committees of the Con- 
gress copies of all such research studies and evaluation summaries. 

(e) The Director shall take the necessary action to assure that all 
studies, evaluations, proposals, and data produced or developed with 
assistance under this Act shall become the property of the United 
States. 

COOPERATION OF AND CONSULTATION WITH OTHER FEDERAL AGENCIES 

Sec. 902. (a) Such information and cooperation as the Director 
may deem necessary for purposes of the evaluations conducted under 
this title shall be made available to him, upon request, by the agencies 
of the executive branch. 

(b) In carrying out evaluations under this title, the Director shall 
consult with the heads of other Federal agencies carrying out activities 
related to the subject matter of those evaluations. 

EVALUATION BY OTHER ADMINISTERING AGENCIES 

Sec. 903. The head of any agency administering a program author- 
ized under this Act may, with respect to such program, conduct evalu- 
ations and take other actions authorized under this title to the same 
extent and in the same manner as the Director under this part. Nothing 
in this section shall preclude the Director from conducting such evalu- 
ations or taking such actions otherwise authorized under this title 
with respect to such programs. 



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249 
TITLE X— LEGAL SERVICES CORPORATION ^ ^ 

STATEMENT OF FINDINGS AND DECLARATION OF PURPOSE 

Sec. 1001. The Congress finds and declared that — 

(1) there is a need to provide equal access to the system of 
justice in our Nation for individuals who seek redress of 
grievances; 

(2) there is a need to provide high quality legal assistance to 
those who would be otherwise unable to afford adequate legal 
counsel and to continue the present vital legal services program; 

(3) providing legal assistance to those who face an economic 
barrier to adequate legal counsel will serve best the ends of justice; 

(4) for many of our citizens, the availability of legal services 
has reafl5rmed faith in our government of laws; 

(5) to preserve its strength, the legal services program must 
be kept free from the influence of or use by it of political pres- 
sures; and 

(6) attorneys providing legal assistance must have full free- 
dom to protect the best interests of their clients in keeping with 
the Code of Professional Responsibility, the Canons of Ethics, 
and the high standards of the legal profession. 

DEFINITIONS 

Sec. 1002. As used in this title, the term — 

(1) ''Board" means the Board of Directors of the Legal Services 
Corporation; 

(2) ''Corporation" means the Legal Services Corporation estab- 
Ushed under this title ; 

(3) "eUgible client" means any person financially unable to 
afford legal assistance; 

(4) "Governor" means the chief executive officer of a State; 

(5) "legal assistance" means the provision of any legal services 
consistent witli the purposes and provisions of this title; 

(6) " recipient" means any grantee, contractee, or recipient of 
financial assistance described in clause (A) of section 1006(a)(1); 

(7) "staff attorney" means an attorney who receives more than 
one-half of his annual professional income from a recipient orga- 
nized solely for the provision of legal assistance to eligible clients 
under this title; and 

(8) "State" means any State of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, American Samoa, the Trust Territory of the 
Pacific Islands, and any other territory or possession of the 
United States. 

ESTABLISHMENT OF CORPORATION 

Sec. 1003. (a) There is estabUshed in the District of Columbia a 
private nonmenbership nonprofit corporation, which shall be known 

^ New title X was added to the Economic Opportunity Act of 1964 by section 2 of the 
Legal Services Corporation Act of 1974, Public Law 93-355, July 25, 1974, 88 Stat. 
378-389. 

* Further amendments made by Public Law 95-222, see p. 



136 



250 

as the Legal Services Corporation, for the purpose of providing finan- 
cial support for legal assistance in noncriminal proceedings or matters 
to persons financially unable to afford legal assistance. 

(b) The Corporation shall maintain its principal office in the Dis- 
trict of Columbia and shall maintain therein a designated agent to 
accept service of process for the Corporation. Notice to or service upon 
the agent shall be deemed notice to or service upon the Corporation. 

(c) The Corporation, and any legal assistance program assisted 
by the Corporation, shall be eligible to be treated as an organization 
described in section 170(c)(2)(B) of the Internal Revenue Code of 
1954 and as an organization described in section 501(c)(3) of the 
Internal Revenue Code of 1954 which is exempt from taxation under 
section 501(a) of such Code. If such treatments are conferred in 
accordance with the provisions of such Code, the Corporation, and 
legal assistance programs assisted by the Corporation, shall be subject 
to all provisions of such Code relevant to the conduct of organiza- 
tions exempt from taxation. 

GOVERNING BODY 

Sec. 1004. (a) The Corporation shall have a Board of Directors 
consisting of eleven voting members appointed by the President, by 
and with the advice and consent of the Senate, no more than six of 
whom shall be of the same political party. A majority shall be mem- 
bers of the bar of the highest court of any State, and none shall be a 
full-time employee of the United States. 

(b) The term of office of each member of the Board shall be three 
years, except that five of the members first appointed, as designated 
by the President at the time of appointment, shall serve for a term of 
two years. Each member of the Board shall continue to serve until 
the successor to such member has been appointed and qualified. The 
term of initial members shall be computed from the date of the first 
meeting of the Board. The term of each member other than initial 
members shall be computed from the date of termination of the 
preceding term. Any member appointed to fill a vacancy occurring 
prior to the expiration of the term for which such member's prede- 
cessor was appointed shall be appointed for the remainder of such 
term. No member shall be reappointed to more than two consecutive 
terms immediately following such member's initial term. 

(c) The members of the Board shall not, by reason of such mem- 
bership, be deemed officers or employees of the United States. 

(d) The President shall select from among the voting members of 
the Board a chairman, who shall serve for a term of three years. 
Thereafter the Board shall annually elect a chairman from among 
its voting members. 

(e) A member of the Board may be removed by a vote of seven 
members for malfeasance in office or for persistent neglect of or 
inability to discharge duties, or for offenses involving moral turpi- 
tude, and for no other cause. 

(f) Within six months after the first meeting of the Board, the 
Board shall request the Governor of each State to appoint a nine- 
member advisory council for such State. A majority of the members 
of the advisory council shall be appointed, after recommendations 
have been received from the State bar association, from among the 



137 



251 

attorneys admitted to practice in the State, and the membership of the 
council shall be subject to annual reappointment. If ninety da3^s have 
elapsed without such an advisory council appointed by the Governor, 
the Board is authorized to appoint such a council. The advisory council 
shall be charged with notifAdng the Corporation of any apparent 
violation of the provisions of this title and applicable rules, regula- 
tions, and guidelines promulgated pursuant to this title. The advisory 
council shall, at the same time, furnish a copy of the notification to 
any recipient affected thereby, and the Corporation shall allow such 
recipient a reasonable time (but in no case less than thirty days) to 
reply to any allegation contained in the notification. 

(g) All meetings of the Board, of any executive committee of the 
Board, and of any advisory council established in connection with 
this title shall be open to the public, and any minutes of such public 
meetings shall be available to the public, unless the membership of 
such bodies, by two-thirds vote of those eligible to vote, determines 
that an executive session should be held on a specific occasion. 

(h) The Board shall meet at least four times during each calendar 
year. 

OFFICERS AND EMPLOYEES 

Sec. 1005. (a) The Board shall appoint the president of the Cor- 
poration, who shall be a member of the bar of the highest court of a 
State and shall be a non-voting ex officio member of the Board, and 
such other officers as the Board determines to be necessary. No officer 
of the Corporation may receive any salary or other compensation for 
services from any source other than the Corporation during his period 
of employment by the Corporation, except as authorized by the Board. 
All officers shall serve at the pleasure of the Board. 

(b)(1) The president of the Corporation, subject to general policies 
established b}^ the Board, may appoint and remove such employees of 
the Corporation as he determines necessary to carry out the purposes 
of the Corporation. 

(2) No political test or political qualification shall be used in 
selecting, appointing, promoting, or taking any other personnel action 
with respect to any officer, agent, or employee of the Corporation or 
of any recipient, or in selecting or monitoring any grantee, contractor, 
or person or entity receiving financial assistance under this title. 

(c) No member of the Board may participate in any decision, 
action, or recommendation with respect to any matter which directly 
benefits such member or pertains specifically to any firm or organiza- 
tion with which such member is then associated or has been associated 
within a period of two years. 

(d) Officers and employees of the Corporation shall be compensated 
at rates determined by the Board, but not in excess of the rate of level 
V of the Executive Schedule specified in section 5316 of title 5, United 
States Code. 

(e)(1) Except as otherwise specifically provided in this title, officers 
and employees of the Corporation shall not be considered officers or 
employees, and the Corporation shall not be considered a department, 
agency, or instrumentality, of the Federal Government. 

(2) Nothing in this title shall be construed as limiting the author- 
ity of the Office of Management and Budget to review and submit 
comments upon the Corporation's annual budget request at the time 
it is transmitted to the Congress. 



138 



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(f) Officers and employees of the Corporation sholl be considered 
officers and employees of the Federal Government for purnoses of the 
following provisions of title 5, United States Code: subchapter I of 
chapter 81 (relating to compensation for work injuries); chapter 83 
(relating to civil service retirement); chapter 87 (relating to life 
insurance); and chapter 89 (relating to health insurance). The Cor- 
poration shall make contributions at the same rates applicable to 
agencies of the Federal Government under the provisions referred to 
in this subsection. 

(g) The Corporation and its officers and employees shall be subject 
to the provisions of section 552 of title 5, United States Code (rehiting 
to freedom of information). 

POWERS, DUTIES, AND LIMITATIONS 

Sec. 1006. (a) To the extent consistent Nnth the provisions of this 
title, the Corporation shall exercise the powers conferred upon a 
nonprofit corporation by the District of Columbia, Nonprofit Corpora- 
tion Act (except for section 1005 (o) of title 29 of the District of 
Columbia Code). In addition, the Corporation is authorized — 

(1)(A) to provide financial assistance to qualified programs 
furnishing legal assistance to eligible clients, and to make grants 
to and contracts with — 

(i) individuals, partnerships, firms, corporations, and non- 
profit organizations, and 

(ii) State and local governments (only upon application 
by an appropriate State or local agency or institution and 
upon a special determination by the Board that the arrange- 
ments to be made by such agency or institution \vi\\ provide 
services which \\ill not be provided adequately through non- 
governmental arrangements), 
for the purpose of providing legal assistance to eligible clients 
under this title, and (B) to make such other grants and contracts 
as are necessary to carry out the purposes and provisions of this 
title; 

(2) to accept in the name of the Corporation, and employ or 
dispose of in furtherance of the purposes of this title, any money, 
or property, real, personal, or mixed, tangible or intangible, 
received by gift, bequest, or otherwise; and 

(3) to undertake directly and not by grant or contract, the 
following activities relating to the delivery of legal assistance — 

(A) research, 

(B) training and technical assistance, and 

(C) to serve as a clearinghouse for information. 

(b)(1) The Corporation shall have authority to insure the coni- 
pliance of recipients and their employees with the provisions of this 
title and the rules, regulations, and guidelines promulgated pursuant 
to this title, and to terminate, after a hearing in accordance ^vith sec- 
tion 1011, financial support to a recipient which fails to comply. 

(2) If a recipient finds that any of its employees has violated or 
caused the recipient to violate the provisions of this title or the rules, 
regulations, and guidelines promulgated pursuant to this title, the 
recipient shall take appropriate remedial or disciplinary action in 
accordance with the types of procedures prescribed in the provisions 
of section 1011. 

jr. ■ - 



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(3) The Corporation shall not, under any provision of this title, 
interfere with any attorney in carrying out his professional respon- 
sibilities to his client as established in the Canons of Ethics and the 
Code of Professional Responsibility of the American Bar Association 
(referred to collectively in this title as 'professional responsibilities') 
or abrogate as to attorneys in programs assisted under this title the 
authority of a State or other jurisdiction to enforce the standards of 
professional responsiblity generally applicable to attorneys in such 
jurisdiction. The Corporation shall ensure that activities under this 
title are carried out in a manner consistent with attorneys' profes- 
sional responsibilities. 

(4) No attorney shall receive any compensation, either directly or 
indirectly, for the provision of legal assistance under this title unless 
such attorney is admitted or otherwise authorized by law, rule, or 
regulation to practice law or provide such assistance in the jurisdic- 
tion where such assistance is initiated. 

(5) The Corporation shall insure that (A) no employee of tho 
Corporation or of any recipient (except as permitted by law in connec- 
tion with such employee's own employment situation) , while carrying 
out legal assistance activities under this title, engage in, or encourage 
others to engage in, any public demonstration or picketing, boycott, 
or strike; and (B) no such employees shall, at any time, engage in, or 
encourage others to engage in, any of the following activities: (i) any 
rioting or civil disturbance, (ii) any activity which is in violation of 
an outstanding injunction of any court of competent jurisdiction, 
(iii) any other illegal activity, or (iv) any intentional identification 
of the Corporation or any recipient with any political activity pro- 
hibited by section 1007(a)(6). The Board, within ninety days after 
its first meeting, shall issue rules and regulations to provide for the 
enforcement of this paragraph and section 1007(a)(5), which rules 
shall include, among available remedies, provisions, in accordance 
with the types of procedures prescribed in the provisions of section 
1011, for suspension of legal assistance supported under this title, 
suspension of an employee of the Corporation or of an}^ employee of 
any recipient by such recipient, and, after consideration of other 
remedial measures and after a hearing in accordance with section 1011, 
the termination of such assistance or employment, as deemed appro- 
priate for the violation in question. 

(6) In areas where significant numbers of eligible clients speak a 
language other than English as their principal language, the Corpo- 
ration shall, to the extent feasible, provide that their principal lan- 
guage is used in the provision of legal assistance to such clients under 
this title. 

(c) The Corporation shall not itself — 

(1) participate in litigation on behalf of clients other than the 
Corporation; or 

(2) undertake to influence the passage or defeat of any legis- 
lation by the Congress of the United States or by any State or 
local legislative bodies, except that personnel of the Corporation 
may testify or make other appropriate communication (A) when 
formally requested to do so by a legislative body, a committee, 
or a member thereof, or (B) in connection with legislation or 
approptiations directly affecting the activities of the Corporation. 



140 



254 

((i)(l) The Corporation shall have no power to issue any shares of 
stock, or to declare or pa}^ any dividends. 

(2) No part of the income or assets of the Corporation shall inure 
to the benefit of any director, officer, or employee, except as reasonable 
compensation for services or reimbursement for expenses. 

(3) Neither the Corporation nor any recipient shall contribute 
or m.ake available corporate funds or program personnel or equip- 
ment to any political party or association, or the campaign of any 
candidate for pubHc or party office. 

(4) Neither the Corporation nor any recipient shall contribute or 
make available corporate funds or program })ersonnel or equipment 
for use in advocating or opposinj^ any ballot measures, initiatives, or 
referendums. However, an attorney may i)rovide legal advice and 
representation as an attorney to any eligible client with respect to 
such client's legal rights. 

(5) No class action suit, class action appeal, or amicus curiae class 
action may be undertaken, directly or through others, by a staff attor- 
ney, except with the express approval of a project director of a recip- 
ient in accordance with policies established by the governing body of 
such recipient. 

(e)(1) Employees of the Corporation or of recipients shall not at 
any time intentionally identify the Corporation or the recipient with 
any partisan or nonpartisan political activity associated with a 
political party or association, or the campaign of any candidate for 
public or party office. 

(2) Employees of the Corporation shall be deemed to be State or 
local employees for purposes of chapter 15 of title 5, United States 
Code. 

(f) If an action is commenced by the Corporation or by a recipient 
and a final order is entered in favor of the defendant and against 
the Corporation or a recipient's plaintiff, the court may, upon motion 
by the defendant and upon a finding by the court that the action was 
commenced or pursued for the sole purpose of harassment of the 
defendant or that the Corporation or a recipient's plaintiff maliciously 
abused legal process, enter an order (which shall be appealable before 
being made final) awarding reasonable costs and legal fees incurred 
by the defendant in defense of the action, except when in contiaven- 
tion of a State law, a rule of court, or a statute of general applicability. 
Any such costs and fees shall be directly paid by the Corporation. 

GRANTS AND CONTRACTS 

Sec. 1007. (a) With respect to grants or contracts in connection 
with the provision of legal assistance to eligible clients under this 
title, the Corporation shall — 

(1) insure the maintenance of the highest quality of service 
and professional standards, the preservation of attorney-client 
relationships and the protection of the integrity of the adversary 
process from any impairment in furnishing legal assistance to 
eligible clients; 

(2) (A) establish, in consultation with the Director of the 
Office of Management and Budget and w^th the Governors of 
the several States, maximum income levels (taking into account 



141 



255 

family size, urban and rural differences, and substantial cost-of- 
living variations) for individuals eligible for legal assistance 
under this title; 

(B) establish guidelines to insure that eligibility of clients 
will be determined by recipients on the basis of factors which 
include — 

(i) the liquid assets and income level of the client, 

(ii) the fixed debts, medical expenses, and other factors 
which affect the client's ability to pay. 

(iii) the cost of living in the locality, and 

(iv) such other factors as relate to financial inabiUty to 
afford legal assistance, which shall include evidence of a 
prior determination, which shall be a disqualifying factor, 
that such individual's lack of income results from refusal 
or unwillingness, without good cause, to seek or accept 
an employment situation; and 

(C) establish priorities to insure that persons least able to 
afford legal assistance are given preference in the furnishing of 
such assistance; 

(3) insure that grants and contracts are made so as to provide 
the most economical and effective delivery of legal assistance to 
persons in both urban and rural areas; 

(4) insure that attorneys employed full time in legal assistance 
activities supported in major part by the Corporation refrain 
from (A) any compensated outside practice of law, and (B) any 
uncompensated outside practice of law except as authorized in 
guidelines promulgated by the Corporation; 

(5) insure that no funds made available to recipients by the 
Corporation shall be used at any time, directly or indirectly, to 
influence the issuance, amendment, or revocation of any executive 
order or similar promulgation by any Federal, State, or local 
agency, or to undertake to influence the passage or defeat of any 
legislation by the Congress of the United States, or by any State 
or local legislative bodies, except where — 

(A) representation by an attorney as an attorney for any 
eligible client is necessary to the provision of legal advice 
and representation with respect to such client's legal rights 
and responsibilities (which shall not be construed to permit 
a recipient or an attorney to solicit a client for the purpose 
of making such representation possible, or to solicit a group 
with respect to matters of general concern to a broad class of 
persons as distinguished from acting on behalf of any par- 
ticular client) ; or 

(B) a governmental agency, a legislative body, a com- 
mittee, or a member thereof requests personnel of any 
recipient to make representations thereto; 

(6) insure that all attorneys engaged in legal assistance activi- 
ties supported in whole or in part by the Corporation refrain, 
while so engaged, from — 

(A) any political activity, or 

(B) any activity to provide voters or prospective voters 
with transportation to the polls or provide similar assistance 
in connection with an election (other than legal advice and 
representation), or 



142 



256 



(C) any voter reg^istration activity (other than legal ad- 
vice and representation) ; 
and insure that staff attorneys refrain at any time during the 
period for which they receive compensation under this title from 
the activities described in clauses (B) and (C) of this paragraph 
and from political activities of the type prohibited by section 
1502(a) of title 5, United States Code, whether partisan or 
nonpartisan ; 

(7) require recipients to establish guidelines, consistent ^\ith 
regulations promulgated by the Corporation, for a system for 
review of appeals to insure the efficient utiHzation of resources and 
to avoid frivolous appeals (except that such guidelines or regula- 
tions shall in no way interfere with attorneys' professional 
responsibilities) ; 

(8) insure that recipients solicit the recommendations of the 
organized bar in the community being served before fiUng staff 
attorney positions in any project funded pursuant to this title 
and give preference in filling such positions to quahfied persons 
who reside in the community to be served; 

(9) insure that every grantee, contractor, or person or entity 
receiving financial assistance under this title or predecessor au- 
thority under this Act which files with the Corporation a timely 
application for refunding is provided interim funding necessary 
to maintain its current level of activities until (A) the applica- 
tion for refunding has been approved and funds pursuant thereto 
received, or (B) the appUcation for refunding has been finally 
denied in accordance with section 1011 of this Act; and 

(10) insure that all attorneys, while engaged in legal assist- 
ance activities supported in whole or in part by the Corporation , 
refrain from the persistent incitement of litigation and any other 
activity prohibited by the Canons of Ethics and Code of Pro- 
fessional Responsibility of the American Bar Association, and 
insure that such attorneys refrain from personal representation 
for a private fee in any cases in which they .were involved while 
engaged in such legal assistance activities. 

(b) No funds made available by the Corporation under this title, 
either by grant or contract, may be used — 

(1) to provide legal assistance with respect to any fee-generating 
case (except in accordance with guideUnes promulgated by 
the Corporation), to provide legal assistance with respect to any 
criminal proceeding, or to provide legal assistance in civil actions 
to persons who have been convicted of a criminal charge where 
the civil action arises out of alleged acts or failures to act and the 
action is brought against an officer of the court or against a law^ 
enforcement official for the purpose of challenging the validity 
of the criminal convict; 

(2) for any of the political activities prohibited in paragraph 
(6) of subsection (a) of this section ; 

(3) to make grants to or enter into contracts with any private 
law firm which expends 50 percent or more of its resources and 
time litigating issues in the broad interests of a majority of the 
public; 



143 



257 



(4) to provide legal assistance under this title to any uneman- 
cipated person of less than eighteen years of age, except (A) with 
the wTitten request of one of such person's parents or guardians, 
(B) upon the request of a court of competent jurisdiction, (C) 
in child abuse cases, custody proceedings, persons in need of 
supervision (PINS) proceedings, or cases involving the initia- 
tion, continuation, or conditions of institutionalization, or (D) 
where necessary for the protection of such person for the purpose 
of securing, or preventing the loss of, benefits, or securing, or 
preventing the loss or imposition of, services under law in cases 
not involving the child's parent or guardian as a defendant or 
respondent ; 

(5) to support or conduct training programs for the purpose 
of advocating particular public policies or encouraging political, 
activities, labor or antilabor activities, boycotts, picketing, strikes 
and demonstrations, as distinguished from the dissemination of 
information about such policies or activities, except that this 
provision shall not be construed to prohibit the training of attor- 
neys or paralegal personnel necessary to prepare them to provide 
adequate legal assistance to eligible clients; 

(6) to organize, to assist or organize, or to encourage to orga- 
nize, or to plan for the creation or formation of, or the struc- 
turing of, any organization, association, coalition, alliance, 
federation, coniederation, or any similar entity, except for the 
provision of legal assistance to eligible clients in accordance with 
guidelines promulgated by the Corporation: 

(7) to provide legal assistance with respect to any proceeding 
or litigation relating to the desegregation of any elementar}' or 
secondary school or school system; 

(8) to provide legal assistance with respect to any preceeding 
or litigation which seeks to procure a nontherapeutic abortion or 
to compel any individual or institution to perform an abortion, or 
assist in the performance of an abortion, or provide facilities for 
the performance of an abortion, contrary to the religious beliefs 
or moral convictions of such individual or institution; or 

(9) to pro\TLde legal assistance with respect to any proceeding 
or litigation arising out of a violation of the Military Selective 
Service Act or of desertion from the Armed Forces of the United 
States. 

(c) In making grants or entering into contracts for legal assist- 
ance, the Corporation shall insure that any recipient organized solely 
for the purpose of providing legal assistance to eligible clients is gov- 
erned by a body at least 60 percent of which consists of attorneys 
who are members of the bar of a State in which the legal assistance is to 
be provided (except that the Corporation (1) shall, upon application, 
grant waivers to permit a legal services program, supported under 
section 222(a)(3) of the Economic Opportunity Act of 1964, which 
on the date of enactment of this title has a majority of persons who are 
not attorneys on its policy-making board to continue such a non- 
attorney majority under the provisions of this title, and (2) may 
grant, pursuant to regulations issued by the Corporation, such a waiver 
for recipients which, because of the nature of the population they 
serve, are unable to comply with such requirement) and which include 



144 



258 

at least one individual eligible to receive legal assistance under this 
title. Any such attorney, while serving on such board, shall not receive 
compensation from a recipient. 

(d) The Corporation shall monitor and evaluate and provide for 
independent evaluations of programs supported in whole or in part 
under this title to insure that the provisions of this title and the bylaws 
of the Corporation and applicable rules, regulations, and guidelines 
promulgated pursuant to this title are carried out. 

(e) The President of the Corporation is authorized to make grants 
and enter into contracts under this title. 

(f) At least thirty days prior to the approval of any grant applica- 
tion or prior to entering into a contract or prior to the initiation of any 
other project, the Corporation shall announce publicly, and shall 
notify the Governor and the State bar association of any State where 
legal assistance will thereby be initiated, of such grant, contract, or 
project. Notification shall include a reasonable description of the grant 
application or proposed contract or project and request comments and 
recommendations. 

(g) The Corporation shall provide for comprehensive, independent 
study of the existing staff-attorney program under this Act and, 
through the use of appropriate demonstration projects, of alternative 
and supplemental methods of delivery of legal services to eligible 
clients, including judicare, vouchers, prepaid legal insurance, and con- 
tracts with law firms; and, based upon the results of such study, shall 
make recommendations to the President and the Congress, not later 
than two years after the first meeting of the Board, concerning 
improvements, changes, or alternative methods for the economical and 
eflfective delivery of such services. 

RECORDS AND REPORTS 

Sec. 1008. (a) The Corporation is authorized to require such re- 
ports as it deems necessary from any grantee, contractor, or person 
or entity receiving financial assistance under this title regarding activi- 
ties carried out pursuant to this title. 

(b) The Corporation is authorized to prescribe the keeping of rec- 
ords with respect to funds provided by grant or contract and shall 
have access to such records at all reasonable times for the purposes 
of insuring compliance with the grant or contract or the terms and 
conditions upon which financial assistance was provided. 

(c) The Corporation shall publish an annual report which shall be 
filed by the Corporation with the President and the Congress. 

(d) Copies of all reports pertinent to the evaluation, inspection, 
or monitoring of any grantee, contractor, or person or entity receiving 
financial assistance under this title shall be submitted on a timely basis 
to such grantee, contractor, or person or entity, and shall be maintained 
in the principal office of the Corporation for a period of at least five 
years subsequent to such evaluation, inspection, or monitoring. Such 
reports shall be available for public inspection during regular business 
hours, and copies shall be furnished, upon request, to interested parties 
upon payment of such reasonable fees as the Corporation may establish. 

(e) The Corporation shall afford notice and reasonable opportu- 
nity for comment to interested parties prior to issuing rules, regula- 



145 



259 

tions, and guidelines, and it shall publish in the Federal Register at 
least 30 days prior to their effective date all its rules, regulations, guide- 
lines, and instruction. 

AUDITS 

Sec. 1009. (a)(1) The accounts of the Corporation shall be audited 
annually. Such audits shall be conducted in accordance with generally 
accepted auditing standards by independent certified public account- 
ants who are certified by a regulatory authority of the jurisdiction in 
which the audit is undertaken. 

(2) The audits shall be conducted at the place or places where the 
accounts of the Corporation are normally kept. All books, accounts, 
financial records, reports, files, and other papers or property belonging 
to or in use by the Corporation and necessary to facilitate the audits 
shall be made available to the person or persons conducting the audits ; 
and full facilities for verifying transactions with the balances and 
securities held by depositories, fiscal agents, and custodians shall be 
afforded to any such person. 

(3) The report of the annual audit shall be filed with the General 
Accounting Office and shall be available for public inspection during 
business hours at the principal office of the Corporation. 

(b)(1) In addition to the annual audit, the financial transactions 
of the Corporation for any fiscal year during which Federal funds 
are available to finance any portion of its operations may be audited 
by the General Accounting Office in accordance with such rules and 
regulations as may be prescribed by the Comptroller General of the 
United States. 

(2) Any such audit shall be conducted at the place or places where 
accounts of the Corporation are normally kept. The representatives 
of the General Accounting Office shall have access to all books, 
accounts, financial records, reports, files, and other papers or property 
belonging to or in use by the Corporation and necessary to facilitate 
the audit; and full facilities for verifying transactions with the 
balances and securities held by depositories, fiscal agents, and cus- 
todians shall be afforded to such representatives. All such books, 
accounts, financial records, reports, files, and other papers or property 
of the Corporation shall remain in the possession and custody of the 
Corporation. 

(3) A report of such audit shall be made by the Comptroller General 
to the Congress and to the President, together with such recommenda- 
tions with respect thereto as he shall deem advisable. 

(c)(1) The Corporation shall conduct, or require each grantee, 
contractor, or person or entity receiving financial assistance under this 
title to provide for, an annual financial audit. The report of each such 
audit shall be maintained for a period of at least five years at the 
principal office of the Corporation. 

(2) The Corporation shall submit to the Comptroller General of 
the United States copies of such reports, and the Comptroller General 
may, in addition, inspect the books, accounts, financial records, files, 
and other papers or property belonging to or in use by such grantee, 
contractor, or person or entity, which relate to the disposition or use 
of funds received from the Corporation. Such audit reports shall be 
available for public inspection, during regular business hours, at the 
principal office of the Corporation. 



146 



260 

(d) Notwithstanding the provisions of this section or section 1008, 
neither the Corporation nor the Comptroller General shall have access 
to any reports or records subject to the attorney-client privilege. 

FINANCING 

Sec. 1010. (a) There are authorized to be appropriated for the 
purpose of carrying out the activities of the Corporation $90,000,000 
for fiscal year 1975, $100,000,000 for fiscal year 1976, and such sums 
as may be necessary- for fiscal year 1977. The first appropriation may 
be made available to the Corporation at any time after six or more 
members of the Board have been appointed and qualified. Appropria- 
tions shall be for not more than two fiscal years, and, if for more than 
one year, shall be paid to the Corporation in annual installments at the 
beginning of each fiscal year in such amounts as may be specified in 
appropriation Acts. 

(b) Funds appropriated pursuant to this section shall remain avail- 
able until expended. 

(c) Non-Federal funds received by the Corporation, and funds, 
received by any recipient from a source other than the Corporation, 
shall be accounted for and reported as receipts and disbursements 
separate and distinct from Federal funds; but any funds so received 
for the provision of legal assistance shall not be expended by recipients 
for any purpose prohibited by this title, except that this provision 
shall not be construed to prevent recipients from receiving other 
public funds or tribal funds (including foundation funds benefiting 
Indians or Indian tribes) and expendmg them in accordance with 
the purposes for which they are provided, or to prevent contracting 
or making other arrangements \\ith private attorneys, private law 
firms, or other State or local entities of attorneys, or with legal aid 
societies having separate public defender programs, for the provision 
of legal assistance to eligible clients under this title. 

SPECIAL LIMITATIONS 

Sec. 1011. The Corporation shall prescribe procedures to insure 
that — 

(1) financial assistance under this title shall not be suspended 
unless the grantee, contractor, or person or entity receiving finan- 
cial assistance under this title has been given reasonable notice 
and opportunity to show cause why such action should not be 
taken; and 

(2) financial assistance under this title shall not be terminated, 
an application for refunding shall not be denied, and a suspension 
of financial assistance shall not be continued for longer than thirty 
days, unless the grantee, contractor, or person or entity receiving 
financial assistance under this title has been afforded reasonable 
notice and opportunity for a timely, full, and fair hearing. 

COORDINATION 

Sec. 1012. The President may direct that appropriate support 
functions of the Federal Government may be made available to the 
Corporation in carrying out its activities under this title, to the 
extent not inconsistent with other applicable law. 



147 



261 

RIGHT TO REPEAL, ALTER, OR AMEND 

Sec. 1013. The right to repeal, alter, or amend this title at any 
time is expressly reserved. 

SHORT TITLE 

Sec. 1014. This title may be cited as the ''Legal Services Corporation 

Act". 

PROVISIONS OF 1974 AMENDMENTS WHICH RELATE TO 
BUT DO NOT AMEND THE ECONOMIC OPPORTUNITY 
ACT OF 1964 

The following provisions of the Headstart, Economic Opportunity, 
and Community Partnership Act of 1974 (Public Law 93-644), while 
relating to the conduct of programs under the Economic Opportunity 
Act of 1964, do not amend the Act as such and therefore are not 
included in the foregoing compilation of provisions of the Act, as 
amended. 

Assistance for Migrant and Other Seasonally Employed 
Farmworkers and Their Families 

Sec. 6. * * * 

******* 

(c) In providing financial assistance under the provisions of part 
B of title III of the Economic Opportunity Act of 1964, the Director 
shall give special consideration to any public or private nonprofit 
agenc}' which has previously received financial assistance thereunder 
for the provision of services for migrant and other seasonally em- 
ployed farmworkers and their families, taking into account financial 
assistance provided to any such agency under section 303 of the 
Comprehensive Employment and Training Act of 1973. 

authorization of appropriations 

Sec. 15. (a)(1) For the purpose of carrying out title I, title II, title 
III, title IV, title V, title VI, title VII, title VIII, and title IX of the 
Economic Opportunity Act of 1964, there are authorized to be appro- 
priated such sums as may be necessary for each of the fiscal years 1975 
through 1977. 

(2) For the purpose of carrying out the programs authorized under 
section 221 there is authorized to be appropriated $330,000,000 for 
the fiscal year 1975 and such sums as may be necessary for each of 
the two succeeding fiscal years. 

(b) Unless the Congress has passed or formally rejected legislation 
extending the authorizations of appropriations for carrying out any 
title of the Economic Opportunity Act of 1964 specified in subsection 
(a) of this section, or adopts a concurrent resolution providing that 
the provisions of this subsection shall not apply, the authorizations of 
appropriations specified in subsection (a) are hereby automatically 
extended for one additional fiscal year beyond the terminal year speci- 
fied in the Economic Opportunity Act of 1964 or in this section. 



25-371 O - 78 - 11 



148 



262 

(c) Any funds appropriated to carry out any program under the 
Community Services Act of 1974 which are not obhtrated prior to the 
end of the fiscal year for which such funds were appropriated shall 
remain available for obligation during the succeeding fiscal year. 

Reflected ix This Compilation of the EcoNo>rir Opportunity 
Act of 1964, as A:mended: 

Economic Opportunity Act of 1964, PubUc Law 88-452, 78 Stat. 
508, August 20, 1964. 

Economic Opportunity Amendments of 1965, Public Law 89-253, 

79 Stat. 973, October 9, 1965. 

Economic Opportunitv Amendments of 1966, Pubhc Law 89-794, 

80 Stat. 1451, November 8, 1966. 

Economic Opportunitv Amendments of 1976, PubUc Law 90-222, 81 
Stat. 672, December 23,^ 1967. 

Economic Opportunity Amendments of 1969, Public Law 91-177, 
83 Stat. 827, December 30, 1969. 

Economic Opportunitv Amendments of 1972, Public Law 92-424, 
86 Stat. 688, September''l9, 1972. 

Comprehensive Employment and Training Act of 1973, Public Law 
93-203, 87 Stat. 839, De<^ember 28, 1973. 

Legal Services Corporation Act of 1974, Public Law 93-355, 88 
Stat. 378, July 25, 1974. 

Headstart, Economic Opportunit}'', and Community Partnership 
Act of 1974. Public Law 93-644, 88 Stat. 2291, January 4, 1975. 

Communitv Services Act Technical Amendments, Public Law 
94-341, 90 Stat. 803, July 6, 1976. 



149 



PUBLIC LAW 95-222— DEC. 28, 1977 



91 STAT. 1619 



Public Law 95-222 
95th Congress 



An Act 



Legal Services 

G)rporation Act 

Amendments of 

1977. 

42 use 2701 

note. 



To amend the Legal Services Corporation Act to provide authorization of appro- Dec. 28, 1977 
priations for additional fiscal years, and for other purposes. [H.R. 6666] 

Be it enacted hy the Senate and House of Representatives of the 
United States of America in Congress assembled, 

Section 1. This Act may be cited as the "Legal Services Corpora- 
tion Act Amendments of 1977". 

DECLARATION OF PURPOSE 

Sec. 2. Section 1001 of the Le^al Services Corporation Act (42 
U.S.C. 2996) is amended by insertmg before the semicolon at the end 
of paragraph (3) "and assist in improving opportunities for low- 
income persons consistent with the purposes of this Act". 

MEMBERSHIP OF GOVERNING BOARD 

Sec. 3. Section 1004(a) of the Legal Services Corporation Act (42 Appointment. 
U.S.C. 2996c(a) ) is amended by inserting at the end thereof the fol- 
lowing new sentence: "Effective with respect to appointments made 
after the date of enactment of the Legal Services Corporation Act 
Amendments of 1977 but not later than July 31, 1978, the membership 
of the Board shall be appointed so as to include eligible clients, and 
to be generally representative of the organized bar, attorneys provid- 
ing legal assistance to eligible clients, and the general public". 



sunshine PROVISION 

Sec. 4. Section 1004(g) of the Legal Services Corporation Act (42 
U.S.C. 2996c (g) ) is amended by striking out all that follows "open" 
and inserting in lieu thereof "and shall be subject to the requirements 
and provisions of section 552b of title 5, United States Code (relating 
to open meetings) .". 

SUPPORT assistance 

Sec. 5. (a) Paragraph (3) of section 1006(a) of the Legal Services 
Corporation Act (42 U.S.C. 2996e(a) (3) ) is amended by striking out 
"and not" and inserting in lieu thereof a comma and "or". 

(b) Section 1006(a) (3) (A) of the Legal Services Corporation Act 
(42 U.S.C. 2996e(a)(3)(A)) is amended by inserting at the end 
thereof the following: "except that broad general legal or policy 
research unrelated to representation of eligiole clients may not l>e 
undertaken by grant or contract,". 

(c) Section 1010 of the Legal Services Corporation Act (42 U.S.C. 
29961) is amended by adding at the end thereof the following new 
subsection : 

"(d) Not more than 10 percent of the amounts appropriated pur- 
suant to subsection (a) of this section for any fiscal year shall be avail- 
able for grants or contracts under section 1006(a)(3) in any such 



Supra. 



150 



91 STAT. 1620 



PUBLIC LAW 95-222— DEC. 28, 1977 



Review 



Appointment 

without 

compensation. 



POWERS, DUTIES, AND LIMITATIONS OF THE CORPORATION AND RECIPIENTS 

Sec. 6. (a) Section 1006(b) (1) of the Legal Services Corporation 
Act (42 U.S.C. 2996e(b)(l)) is amended by inserting "(A)" after 
"Sec. 1006. (b) (1)" and by adding at the end thereof the following 
new subparagraph : 

"(B) No question of whether representation is authorized under 
this title, or the rules, regulations or guidelines promulgated pur- 
suant to this title, shall t^ considered in, or affect the final disposi- 
tion of, any proceeding in which a person is represented oy a 
recipient or an employee of a recipient. A litigant in such a pro- 
ceeding may refer any such question to the Corporation which 
shall review and dispose of the question promptly, and take appro- 
priate action. This subparagraph shall not preclude judicial review 
available under applicable law.". 

(b) Section 1006(c) (1) of the Legal Services Corporation Act (42 
U.S.C. 2996e(c) (1)) is amended to read as follows: 

"(1) participate in litigation unless the Corporation or a recip- 
ient of the Corporation is a party, or a recipient is representing an 
eligible client in litigation in which the interpretation of this title 
or a regulation promulgated under this title is an issue, and 
shall not participate on behalf of any client other than itself; 
or". 

(c) Section 1006(d) of the Legal Services Corporation Act (42 
U.S.C. 2996e(d) ) is amended by adding at the end thereof the follow- 
ing new paragraph : 

"(6) Attorneys employed by a recipient shall be appointed to pro- 
vide legal assistance without reasonable compensation only when such 
appointment is made pursuant to a statute, rule, or practice applied 
generallv to attorneys practicing in the court where the appointment 
is made.". 

ACTIVITIES OP STAFF ATTORNEYS 

Sec. 7. (a) Paragraph (2) of section 1006(e) of the Legal Services 
Corporation Act (42 U.S.C. 2996e(e)(2)) is amended by inserting 
"and staff attorneys" after "Corporation", and by inserting before 
the period at the end thereof a comma and the following : "except that 
no staff attorney may be a candidate in a partisan political election". 

(b) Section 1007(a) (6) of the Legal Services Corporation Act (42 
U.S.C. 2996f (a) (6) ) is amended by striking out the matter following 
clause (C). 

REIMBURSEMENT FOR SUCCESSFUL DEFENDANTS 

Sec. 8. The fifst sentence of section 1006(f) of the Legal Services 
Corporation Act (42 U.S.C. 2996e(f)) is amended by striking out 
"may" and inserting in lieu thereof "shall". 



ASSISTANCE CRITERIA 

Sec. 9. (a) Paragraph (2) (B) (iv) of section 1007(a) of the Legal 
Services Corporation Act (42 U.S.C. 2996f (a) (2) (B) (iv)) is 
amended to read as follows: 

"(iv) such other factors as relate to financial inability to afford 
legal assistance, which may include evidence of a prior deter- 
mination that such individual's lack of income results from 
refusal or unwillingness, without good cause, to seek or accept an 
employment situation ; and". 



151 



PUBLIC LAW 95-222— DEC. 28, 1977 91 STAT. 1621 

(b) (1) Paragraph (2) (C) of section 1007(a) of the Legal Services 
Corporation Act (42 U.S.C. 2996f (a) (2) (C)) is amended to read as 
follows: 

"(C) insure that (i) recipients, consistent with goals established 
by the Corporation, adopt procedures for determining and 
implementing priorities for the provision of such assistance, 
taking into account the relative needs of eligible clients for such 
assistance (including such outreach, training, and support services 
as may be necessary) , including particularly the needs for service 
on the part of significant segments of the population of eligible 
clients with special difficulties of access to legal services or special 
legal problems (including elderly and handicapped individuals) ; 
and (ii) appropriate training and support services are provided in 
order to provide such assistance to such significant segments of 
the population of eligible clients;". 
(2) Section 1008(c) of the Legal Services Corporation Act (42 Annual report, 
U.S.C. 2996g(c)) is amended by adding at the end thereof the fol- contents, 
lowing new sentence: "Such report shall include a description of 
services provided pursuant to section 1007(a) (2) (C) (i) and (ii).". Supra. 

(c) Paragraph (5) of section 1007(a) of the Legal Services Cor- 
poration Act (42 LLS.C. 2996f (a) (5) ) is amended to read as follows: 

"(5) insure that no funds made available to recipients by the 
Corporation shall be used at any time, directly or indirectly, to 
influence the issuance, amendment, or revocation of any executive 
order or similar promulgation by any Federal, State, or local 
agency, or to undertake to influence the passage or defeat of any 
legislation by the Congress of the L^nited States, or by any State 
or local legislative bodies, or State proposals by initiative peti- 
tion, except where — 

"(A) representation by an employee of a recipient for any 
eligible client is necessary to the provision of legal advice 
and representation with respect to such client's legal rights 
and responsibilities (which shall not be construed to permit 
an attorney or a recipient employee to solicit a client, in viola- 
tion of professional responsibilities, for the purpose of making 
such representation possible) ; or 

"(B) a governmental agency, legislative body, a committee, 
or a member thereof — -. 

"(i) requests personnel of the recipient to testify, 
draft, or review measures or to make representations to 
such agency, body, committee, or member, or 

"(ii) is considering a measure directly affecting the 
activities under this title of the recipient or the Cor- 
poration.". 

LIMITATIONS ON USE OF FUNDS 

Sec. 10. Section 1007(b) of the Legal Services Corporation Act 
(42 U.S.C. 2996f (b) ) is amended to read as follows : 
^ "(b) No funds made available by the Corporation under this title, 
either by grant or contract, may be used — 

"(ly to provide legal assistance (except in accordance with 
guidelines promulgated by the Corporation) with respect to 
any fee-generating case (which guidelines shall not preclude the 
provision of legal assistance in cases in which a client seeks only 
statutory benefits and appropriate private representation is not 
available) ; 



152 



91 STAT. 1622 PUBLIC LAW 95-222— DEC. 28, 1977 

"(2) to provide legal assistance with respect to any criminal 
proceeding, except to provide assistance to a person charged with 
a misdemeanor or lesser offense or its equivalent in an Indian 

tribal court; ...... i. 

"(3) to provide legal assistance in civil actions to persons who 
have been convicted of a criminal charge where the civil action 
arises out of alleged acts or failures to act and the action is brought 
against an officer of the court or against a law enforcement official 
for the purpose of challenging the validity of the criminal 

conviction; , ., • j • i. 

"(4) for any of the political activities prohibited in paragraph 
(6) of subsection (a) of this section ; 

"(5) to make grants to or enter into contracts with any private 
law firm which expends 50 percent or more of its resources and 
time litigating issues in the broad interests of a majority of the 
public; 

"(6) to support or conduct training programs for the purpose 
of advocating particular public policies or encouraging political 
activities, labor or antilabor activities, boycx)tts, picketing, strikes, 
and demonstrations, as distinguished from the dissemination of 
information about such policies or activities, except that this pro- 
vision shall not be construed to prohibit the training of attorneys 
or paralegal personnel necessary to prepare them to provide ade- 
quate legal assistance to eligible clients ; 

"(7) to initiate the formation, or act as an organizer, of any 
association, federation, or similar entity, except that this para- 
graph shall not be construed to prohibit the provision of legal 
assistance to eligible clients • 

"(8) to provide legal assistance with respect to any proceeding 
or litigation which seeks to procure a nontherapeutic abortion or to 
compel any individual or institution to perform an abortion, or 
assist in the performance of an abortion, or provide facilities for 
the performance of an abortion, contrary to the religious beliefs or 
moral convictions of such individual or institution ; 

"(9) to provide legal assistance with respect to any proceeding 
or litigation relating to the desegregation of any elementary or 
secondary school or school system, except that nothing in this 
paragraph shall prohibit the provision of legal advice to an eli- 
gible client with respect to such client's legal rights and respon- 
sibilities ; or 

" (10) to provide legal assistance with respect to any proceeding 
or litigation arising out of a violation of the Military Selective 
50 use app. Service Act or of desertion from the Armed Forces of the 

*^1- United States, except that legal assistance may be provided to 

an eligible client in a civil action in which such client alleges that 
he was improperly classified prior to July 1, 1973, under the 
Military Selective Service Act or prior corresponding law.". 

GOVERNING BODIES OF RECIPIENTS 

Sec. 11. Section 1007(c) of the Legal Services Corporation Act (42 
U.S.C. 2996f(c)) is amended by striking out "and which includes at 
least one individual eligible to receive legal assistance under this title." 
and inserting in lieu thereof "and at least one-third of which consists 
of persons who are, when selected, eligible clients who may also be 
representatives of associations or organizations of eligible clients.". 



t 



153 



PUBLIC LAW 95-222— DEC. 28, 1977 91 STAT. 1623 

NOTIFICATION 

Sec. 12. Section 1007(f) of the Legal Services Corporation Act 
(42 U.S.C. 2996f (f ) ) is amended by striking all that follows "Gover- 
nor" and inserting in lieu thereof a comma and : "the State bar asso- 
ciation of any State, and the principal local bar associations (if there 
be any) of any community, where legal assistance will thereby be 
initiated, of such grant, contract, or project. Notification shall include 
a reasonable description of the grant application or proposed contract 
or project and request comments and recommendations.". 

ELIGIBLE clients' SPECIAL NEEDS ASSESSMENT STUDY 

Sec. 13. Section 1007 of the Legal Services Corporation Act (42 
U.S.C. 2996f ) is amended by adding at the end thereof the following 
new subsection : 

"(h) The Corporation shall conduct a study on whether eligible 
clients who are — 

"(1) veterans, 
"(2) native Americans, 
" ( 3 ) migrants or seasonal farm workers, 
" (4) persons with limited English-speaking abilities, and 
" (5) persons in sparsely populated areas where a harsh climate 
and an inadequate transportation system are significant impedi- 
ments to receipt of legal services 
have special difficulties of access to legal services or special legal 
problems which are not being met. The Corporation shall report to Report to 
Congress not later than January 1, 1979, on the extent and nature of Congress, 
any such problems and difficulties and shall include in the report and 
implement appropriate recommendations.". 

AUDITS AND RECORDKEEPING 

Sec. 14. Paragraph (2) of section 1009(b) of the Legal Services 
Corporation Act (42 U.S.C. 2996h(b)(2)) is amended by striking 
out the period at the end of the last sentence and inserting in lieu 
thereof "throughout the period beginning on the date such possession 
or custody commences and ending three years after such date, but the 
General Accounting Office may require the retention of such books, 
accounts, financial records, reports, files, papers, or property for a 
longer period under section 117(b) of the Accounting and Auditing 
Act of 1950 (31 U.S.C. 67(b)).". 

FINANCING 

Sec. 15. (a) Section 1010(a) of the Legal Services Corporation Act Appropriation 
(42 U.S.C. 29961 (a) ) is amended by inserting after the first sentence authorization, 
the following new sentence : "There are authorized to be appropriated 
for the purpose of carrying out the activities of the Corporation 
$205,000,000 for the fiscal year 1978, and such sums as may be necessary 
for each of the two succeeding fiscal years.". 

(b) The last sentence of section 1010(a) of the Legal Services Cor- 
poration Act (42 U.S.C. 29961 (a)) is amended to read as follows: 
"Appropriations for that purpose shall be made for not more than two 
fiscal years, and shall be paid to the Corporation in annual installments 
at the beginning of each fiscal year in such amounts as may be specified 
in Acts of Congress making appropriations.". 



154 



91 STAT. 1624 



PUBLIC LAW 95-222— DEC. 28, 1977 



Appointment. 



HEARINO EXAMINERS 

Sec. 16. Section 1011(2) of the Legal Services Corporation Act 
(42 U.S.C. 2996] (2)) is amended by inserting before the period at 
the end thereof a comma and "and, wnen requested, such hearing shall 
be conducted by an independent hearing examiner. Such hearing shall 
be held prior to any final decision by the Corporation to terminate 
financial assistance or suspend or deny funding. Hearing examiners 
shall be appointed by the Corporation in accordance with procedures 
established in regulations promulgated by the Corporation '. 



42 use 2996f 
note. 

42 use 2996i 

note. 

42 use 2996 

note. 



EFFECTIVE DATES 

Sec. 17. (a)(1) The amendment made by section 11 of this Act 
shall be effective six months after the first day of the first calendar 
month following the date of enactment of this Act. 

(2) The amendment made by section 15 of this Act shall be effec- 
tive with respect to fiscal years beginning after September 30, 1977. 

(b) The amendments made by provisions of this Act other than 
sections 11 and 15 shall be effective on the date of enactment of this 
Act. 



Approved December 28, 1977. 



LEGISLATIVE HISTORY : 

HOUSE REPORT No. 95-310 (eomm. on the Judiciary) and 95-825 (eomm. of 

eonference). j 

SENATE REPORT No. 95-172 accompanying S. 1303 (eomm. on Human Resources). I 
eONGRESSIONAL REeORD, Vol. 123 (1977): 1 

June 9, 27, considered and passed House. 

Oct. 12, considered and passed Senate, amended, in lieu of S 1303. 

Dec. 7, House agreed to conference report. 

Dec. 15, Senate agreed to conference report. 



155 

Appendix C f 



LEGISLATION PENDING BEFORE THE SUBCOMMITTEE 
WHICH WOULD AMEND THE ECONOMIC OPPORTUNITY ACT 
S. 2090, S. 2081, S. 1919 



156 



§5th congress c* ^%r\r\£^ 

1-s— b. 2090 



IN THE SENATE OF THE UNITED STATES 

September 14, 1977 

Mr, Nelson (for himself, Mr. Williams, Mr. Javits, Mr. Kennedy, Mr. Cran- 
ston, and Mr. Riegle) introduced tlie following bill ; which was read twice 
and referred to the Coninii»tec on Human Resources 



A BILL 

To extend for three additional years the authorization of titles 
I, II, III, V, VI, VII, VIII, and IX of the Economic 
Opportunity Act of 1964, and for other purposes. 

1 Be it enacted by the Senate and House of Representa- 

2 tives of the United States of America in Congress assembled, 

3 That this Act may he cited as the "Economic Opportunity 

4 Amendments of 1977". 

5 STATEMENT OF PURPOSE 

6 Sec. 2. It is the purpose of this Act to extend programs 

7 under titles I, II, III, V, VI, VII, VIII, and IX of the 

8 Economic Opportunity Act of 1964. 

II 



157 



2 

1 AUTHORIZATION OF APPROPRIATIONS 

2 Sec. 3. (a) There are authorized to be appropriated 

3 for purposes of carrying out title I of the Economic Oppor- 

4 tunity Act of 1964 (hereafter in this Act referred to as 

5 "the Act") such sums as may be necessary for fiscal years 

6 1978 through 1981. 

7 (b) Section 237 of the Act is amended by striking out 

8 ''two succeeding fiscal years" and inserting in lieu thereof 

9 "six succeeding fiscal years". 

10 (c) Section 245 of the Act is amended by striking out 

11 "eleven succeeding fiscal years" and inserting in lieu thereof 

12 "fourteen succeeding fiscal years". 

13 (d) Section 321 of the Act is amended by striking out 

14 "eleven succeeding fiscal years" and inserting in lieu thereof 

15 "fourteen succeeding fiscal years". 

16 (e) Section 615 of the Act is amended by striking out 

17 "eleven succeeding fiscal years" and inserting in lieu thereof 

18 "fourteen succeeding fiscal years". 

19 (f) Section 703 of the Act is amended by striking out 

20 "two succeeding fiscal yeai*s" and inserting in lieu thereof 

21 "six succeeding fiscal years, to remain available until 

22 expended". 

23 (g) There are authorized to be appropriated for pur- 

24 poses of carrying out title IX of the Act such sums as may 

25 be necessary for fiscal years 1978 through 1981. 



158 



. '3 

2 (h) Section 512 of the Act is amended by inserting 

2 before tbe period in such section a comma and "and for fiscal 

3 years 1978 through 1981'\ ; 

4 (i) Section 552 of the Act is amended by striking out 

5 "two succeeding fiscal years" and inserting in lieu thereof 

6 "four succeeding fiscal years". 

7 (j) Section 814 of the Act is amended by inserting 

8 before the period in such section a comma and "and for 

9 fiscal years 1978 through 1981". 

10 COMMUNITY ACTION BOAEDS 

11 Sec. 4. (a) Section 211 (b) of the Act is amended to 

12 read as follows: 

13 "(b) Each board to which this subsection applies shall 

14 consist of not more than fifty-one and not less than fifteen 

15 members and shall be so constituted that (1) one-third of 

16 the members of the board are current elected pubhc officials, 

17 or their representatives, except that if the number of 

18 current elected officials reasonably available and willing to 

19 serve is less than one-third of the membership of the board, 

20 membership on the board of appointive public ofiicials may be 

21 counted in meeting such one-third requirement, (2) at least 

22 one-third of the members are persons chosen in accordance 

23 with democratic selection procedures adequate to assure that 

24 they are representative of the poor in the area served, and 

25 (3 ) the remainder of the members are officials or members o{ 



159 



4 

1 business, industry, labor, religious, welfare, education, or 

2 other major groups and interests in the community. Each 

3 member of the board selected to represent a specific geo- 

4 graphic area >\dthin a community must reside in the area 

5 he represents. No person selected under clause (2) or (3) 

6 of this subsection as a member of a board shall serve on such 

7 board for more than three consecutive years, or more than a 

8 total of seven years.". 

9 (b) (1) The third sentence of section 222 (a) (11) of 

10 the Act is amended by inserting after "Mainstream pro- 

11 grams" the following: ''and programs under the Comprehen- 

12 sive Employment and Training Act of 1973". 

13 (2) Section 222 (a) (13) of the Act is amended to read 

14 as follows: 

15 " ( 13) A program to be known as summer youth recrea- 

16 tion designed to provide recreational opportunities for low- 

17 income children during the summer months. Funds made 

18 available for this section shall be allocated by the Director 

19 among community action agencies where feasible, or other 

20 public or private nonprofit agencies where no such commu- 

21 nity action agency exists or is able to administer a program 

22 to provide recreational opportunities for low-income children 

23 during the summer months.". 

24 (c) The first sentence of section 225 (c) of the Act is 

25 amended to read as follows: "Unless othervsase provided 



160 



5 

1 in this part, financial assistance to a Community Action 

2 Agency or other agency pursuant to sections 221 and 222 

3 (a) shall not exceed 80 per centum of approved costs of 

4 assisted programs.". 

5 ADMINISTRATION 

6 Sec. 5. (a) Section 601 (c) of the Act is amended to 

7 read as follows : 

8 "(c) The Administration shall be an independent 

9 agency. The Director shall have the responsibility for carry- 

10 ing out titles I, II, III, VI, VII, and IX of this Act.". 

11 (b) Section 602 (d) of the Act is amended by striking 

12 out 'Svith the approval of the President,". 

13 (c) (1) The first sentence of section 605 (c) of the Act 

14 is amended by inserting "and endmg with the calendar year 

15 1978" before the period at the end thereof. 

16 (2) Section 605 (c) of the Act is amended by inserting 

17 at the end thereof the following new sentence: "The Ad- 

18 visory Council shall cease to exist sixty days after making 

19 the final annual report required by this subsection.". 

20 (d) The second sentence of section 620 of the Act is 

21 repealed. 

22 COMMUNITY ECONOMIC DEVELOPMENT 

23 Sec 6. (a) Section 714(2) of the Act is amended to 

24 read as follows : 

25 "(2) be made available to the grantee, in accord- 



161 



6 

1 ance with current Department of the Treasury regula- 

2 tions and other conditions which the Director deems 

3 appropriate, within thirty days following approval of the 

4 grant agreement by the Director and such grantee of the 

5 grant agreement.". 

6 (b) The first sentence of section 731 (a) of the Act is 

7 amended by inserting after the words ''under this title" the 

8 following: "and to Community Action Agencies and other 

9 community-based organizations eligible for financial assist- 

10 ance under title II of this Act,". 

11 REPEALER 

12 Sec. 7. The following provisions of the Act are re- 

13 pealed: 

14 (1) Section 210 (f) . 

15 (2) Section 222 (a) (10). 

16 (3) Section 226. 
1'7 (4) Section 228. 

18 (5) Section 236. 

19 (6) Section 240. 

20 (7) Subsections (e) , (f) , (g) , and (h) of section 

21 601. 

22 (8) Section 745. 

23 (9) Sections 581, 582, and 583. 



162 



7 

1 SPECIAL PROGRAMS AND ASSISTANCE 

2 Sec. 8. Section 222(a) (12) of the Act is amended 

3 by striking out "winterization of old or substandard dwell- 

4 ings, improved space conditioning, and insulation;". 

5 BFFECTIVB DATE 

6 Sec. 9. (a) Sections 1 through 7 of this Act shall take 

7 eflFect upon the date of enactment of this Act. 

8 (b) Section 8 of this Act shall take effect on October 1, 

9 1978. 



163 



95TII CONGRESS ^ £^^\. r^ 4 

isx Session Vj^ 2081 



IN THE SENATE OF THE UNITED STATES 

September 9 (legislative day, September 8), 1977 

Mr. Cranston introduced the following bill; which was read twice and 
referred to the Committee on Human Resources 



A BILL 

To provide for the extension and expansion of the Headstart 

program. 

1 Be it enacted by the Senate and House of Representa- 

2 tives of the United States of America in Congress assembled, 

3 That this Act may be cited as the "Headstart Extension 

4 Act of 1977". 

5 Sec. 2. Section 512 of the Economic Opportunity Act 

6 of 1964 (hereinafter referred to as "the Act") (42 U.S.C. 

7 2928a) is amended by striking out the period at the end 

8 thereof and inserting the following: "and $650,000,000 

9 for fiscal year 1978, $750,000,000 for fiscal year 1979, 

10 $850,000,000 for fiscal year 1980, and $1,000,000,000 for 

11 fiscal year 1981.". 

II 



25-371 O - 78 - 12 



164 



2 

1 Sec. 3. Section 513 (a) of the Act (42 U.S.C. 2928b 

2 (a) ) is amended by — 

3 (a) striking out "The" and inserting in lieu thereof 

4 ^'Except as otherwise provided in this part, the"; and 

5 (b) striking out "fiscal year 1975" and inserting 
Q in lieu thereof "fiscal year 1978". 

7 Sfx\ 4. Section 514(c) of the Act (42 U.S.C. 2928c 

3 (c) ) is amended by adding at the end thereof the following 

9 new sentence: "The Secretary shall require that parents 

10 and area residents affected by the program be significantly 

11 involved in the selection of headstart agencies.". 

12 Sec. 5. Section 515(b) (1) of the Act (42 U.S.C. 

13 2928d (b) ( 1 ) ) is amended by inserting "directly participate 

14 in decisions that" after "to", 

15 Sec. 6. Section 517(b) of the Act (42 U.S.C. 2928 

16 (b) ) is amended by striking out "six" and inserting in lieu 

17 thereof "twelve" in the last sentence. 

18 Sec. 7. (a) Section 5^3 (b) of the Act (42 U.S.C. 

19 29281(b)) is amended by— 

20 (1) inserting "(1)" after "subsection (a)"; 

21 (2) striking out "subsection (b)" and inserting in 

22 lieu thereof "subsection (a) (2)"; and 

23 (3) striking out "thirty" the second place it appears 

24 therein and inserting in lieu thereof "ninety". 



1«5 



3 

1 (b) Section 523(c) of the Act (42 U.S.C. 29281 

2 (c) ) is amended by striking out "Director" and inserting 

3 in lieu thereof "Secretary". 

4 (c) Section 523 (d) of the Act (42 U.S.C. 29281 (d) ) 

5 is amended by striking out "Director" and inserting in lieu 

6 thereof "Secretaiy" in both places it appears. 

7 Sec. 8. Section 524(b) of the Act (42 U.S.C. 2928m 

8 (b) ) is amended by amending the first sentence thereof to 

9 read as follows: "The Secretary shall operate the programs 

10 and projects covered by this part in accordance with Head- 

11 start performance standards established by him. Any revisions 

12 in such standards shall result in standards which are no less 

13 comprehensive than those in effect on the date of enactment 
1* of the Headstart Extension Act of 1977.". 



166 



95x31 CONGRESS Ol 1 /\ <| /\ 

l3T Session m I %J I %M 



IN THE SENATE OF THE UNITED STATES 

July 25 (legislative day, July 19) , 1J977 

Mr. GiLVVEL intxoduced the following bill; which was read twice and referred 
to the Committee on Human Resmiices 



A BILL 

To amend the Headstart-Follow Through Act to provide more 
flexible criteria for participation in Headstart progmms, and 
for other purposes. 

1 Be it enacted by the Senate and House of Representa- 

2 tives of the United States of America in Congress assembled, 

3 That (a) the second sentence of section 518 (a) of the 

4 Economic Opportunity Act of 1964 is amended by striking 

5 out "Such" and inserting in lieu thereof "Except as provided 

6 in the last sentence of this subsection, such". 

'^ (b) Such section 518(a) is amended by adding at the 

S end thereof the following new sentence : "Whenever a head- 

9 start program is operated in a community of 1,000 or less 

10 individuals and (1) there is no other preschool program 

n 



167 



1 in the community; (2) tbere is no resident professional 

2 medical service provider in the community; (3) the com- 

3 munity is in a location which, by reason of remoteness, does 

4 not permit reasonable access to services described in clauses 

5 (1) and (2) ; and (4) at least 50 percent or more of the 
C families to be served in the community are eligible under 
'^ income guidelines estabUshed by the Secretary, the head- 

8 start program in each such locality shall establish the criteria 

9 for eligibility/'. 



168 

Appendix 



COMMUNICATION BETWEEN THE AGENCIES AND THE CONGRESS 
REGARDING LEGISLATION AND OVERSIGm- 



169 



>*>- i^s'rVii 



Honorable waiter F. Mondale 
President of the Senate 
Waahington, D.C. 20510 

Dear Kr, Fzreaident.: ^ 

file Comnmntty Services Adainiatration is one of 
this oountry * s expressions of its cosaait&ent to the 

liow at this point in history, there is the force 
of political change — change evidenced by a renewed 
cosaitiaent and dedication to the programs designed to 
siitigate the materi2tl manifestations of poverty in 
aaerica. 

innia new dedication and cossmitment require a strong 
agency leadership, CongressionzLL support and a new 
lifespan for the Coimminity Services Administration 
to develop creative and effective directions for the 
•war on poverty." 

li is for these reasons, and in the spirit of 
Congress' desire to reevaluate and re justify prograsts 
conducted by the Federal govermaent, that I recormnend 
a three year extension for the Coiamunity Services 
Administration and the programs it administers under 
the Economic Opportunity Act of 1964. 

This bill would also restore to the Director the 
option of delegating to regional officials the 
at:thority to approve grants or contracts or to set 
policy. Such a procedure may offer more substantive 
review of and control over grants and contracts, while 
at the same time providing for less movement of p«^>er 
and greater exercise of the evaluation function at 
the national level. 



170 



- 2 - 



This bill %irould also restore the funding formula 
for local initiative programs to the 80 per centum 
Federal and 20 per centum non-Federal share. This 
formula was strictly complied with from 1968 through 
1975. An attempt to reduce the expression of commit* 
Bent at the Federal level to our service delivery 
system to the poor, at a time vhen our economy has 
increased their needs, works at cross purposes to the 
original intent of the Act and the mission mandated 
for this agency* 

This bill also includes technical, cleurifying 
amendments to sections of the Act which have caused 
administrative problems or have never been istplemented 

Me are advised by the Office of Management and Budget 
that enactment of this draft bill would be in accord 
with the program of the President. : - '^*'. i -. . 

Sincerely,:-5^^'*^£A^'^r^^ii. j;i>iL^'!:/.^ • 



/-rc 



.Vtfri-Ur- • :- ■'i:*.:"C^ 



Graciela (Grace) Olivzurez ' -^ - =• ^^^^ 

Director --•: ^. :,i:.: ..:?-; ..^^.^. i^:rAr*;^vv 



171 



8ptta3cer''of the Bouse ^^~ ......v.v. ,.-. w^^-oi3 ^.^xv^^^s^ ;^. t;> 

. of -Representatives ■ '''- ■"■-- .^^e 'u^i.^^^:.::?: -r^yt^^^z^^xi 
fiftshixigton. D.C« 20515 

Dear Mr. SpeaJterr*'^' -.-^ : : : .. - ^ i 

She CoBBBonity Services Administration is one of ~ 
this country's expressions of its coBBaitxaent to the 
poor* - — '-''•.- - ^ . ^ s,, - ,-,>•...,> -.,-,-^: 

Hoiir^'at this point in history, there is the force 
of political change — change evidenced by a renewed 
coTiBnttBent and dedication to the prograns designed to 
mitigate the material manifestations of poverty in 
iyoerica. 

This neW^ dedication axid' commitment require a strong 
^ency leadership. Congressional support and a new 
lifespan for the Community Services Administration 
to develop creative and effective directions for the 
■war on poverty." 

It is for these reasons, and in the spirit of 
Congress' desire to reevaluate emd re justify programs 
conducted by the Federal government, that: X recommend 
a three year eactensio:! for the Community Services 
Administration and the programs it administers under 
the Eoonomic Opportunity Act of 1964. 

This bill would also restore to the Director the 
option of delegating to regional officials the 
authority to approve grants or contracts or to set 
policy. Such a procedure may offer Biore substantive 
rsfview of and ^sntrol over grants and contracts, while 
At the same tixae providing for less movement of paper 
and greater exercise of the evaluation function at 
the national levels 



172 



- 2 



This bill i«ould also restore the funding formula 
for local initiative programs to the 80 per centum 
Federal and 20 per centum non-Federed. share. This 
formula wslb strictly complied with from 1968 through 
1975. An attempt to reduce the expression of commit 
Bent at the Federal level to our service delivery 
.system to the poor, at a time when our economy has 
increased their needs, works at cross purposes to the 
original intent of the Act and the mission m£mdated 
fox this agency. 

This bill Also includes technical, clarifying 
' amftndments to sections of the Act which have caused 
radml n1 strative problems or have never been iaqplemente 

.'M are ^advised by the Office of Management and Budget 
^that enactment of this draft bill would be in accord 
^^ndLth the program of the President. 'i ?: cv.-*^ 



• ,fiixicerely, ^.^^ ^i^itc^- 

^:Graciela (Grace) Oliveurea 

-Jiirector ^c^:^^;^;^ • 



j^iA'^^i'v; 



173 



DELLIOn 

mh: 8/31/77 



gtp . ^-' D. CA 



Honorable Walter F. Mondale 
President of the Senate 
Hishlngton, O.C. 20&10 

Dear Hr, President: 

On July 21, 1977, I transmitted to the Congress a legislative 
proposal, rtferred to as the draft "Economic Opportunity 
Araendnents of 1977.''. I aia now sending an anjendnient to that 
proposed legislation which I hope Congress will favorably con- 
sider. 

During ay July 21, 1977, testimony before the House Subconmlttee 
OA Economic Opportunity. I advised the Subcommittee that the 
Adnlnlstratlon was reviewing the CSA and FEA Federal weatherl- 
zatlon activities both of which provide funding to community 
action agencies. Numerous concerns have been expressed by 
coBRHjnlty action agencies and agency field representatives 
regarding conflicting CSA and FEA regulations, reporting 
requlreioents, and the other problesis which arise when there 
are two sources of funds awarded to the same grantee for the 
tajtie purpose. 

Since wy testlofiony, the President has re-examined this problem 
and decided It did not make sense to run two weatherlzatlon 
programs administered by two different Federal agencies which 
have differing requlreraents. He recognizes and supports the 
tchlevements of cofnrnunlty action agencies which Initiated and 
lupletaented the weatherlzatlon effort. He also finaly believes 
that an on-going, national energy conservation program should 
logically be administered at the Federal level by the Departfnent 
of Energy which will have substantial technical expertise In this 
area. 

The consolldaton of the weatherlzatlon program under DOE- -authorized 
at $200 Million In 1979— will retain Its focus on the poor and 
coaraunlty action agencies will continue to receive the grant funds. 
Ky agency of course will assist DOE In seeing that weatherlzatlon 
services are delivered effectively and efficiently to the poor. 



174 



While It Is obviously difficult for arvy Federal agency to 
"give up" one of Its prograras, I believe this consolidation 
represents the fulflllnent of one of our agency's basic 
nlsslons-the development of Innovative ways to assist the poor. 
CoBKwnlty action agencies, on their own Initiative and with 
CSA technical assistance and support, developed and tested the 
weatherlzatlon of hocues for the poor. Our efforts have been 
well -recognized and proven successful and weatherlzatlon now 
has evolved Into an established Federal prograiu with broad 
national support. 

I believe It should be noted that the President decided merely 
to eliminate frofn Section 222(a)(12) the phrase authorizing 
"wlnterlzatlon of old or substandard dwellings. Improved space 
conditioning, and Insulation.** Nufrwrous other experimental 
and emergency energy conservation activities which are authorized 
would remain In our Act and efforts are underway to test new 
concepts In these areas to reduce the energy costs of the poor. 

Enclosed with this letter Is an amendment to our proposed CSA 
reauthorization bill which would revise Section 222(a)(12} 
effective In Fiscal Year 1979 as we have recoranended. 

Ue are advised by ttie Ufflce of Management and Budget that enact- 
nent of this amendment to our proposed "Economic Opportunity 
Anendnents of 1977" would be In accord with the program of the 
President. 

Sincerely, 

/S/. yraclcfa \{j>-acej Ulimr?^ 

Graclela (Grace) Ollvarez 
Director 

Enclosure 



175 

AN AMENDMENT 
To amend the proposed "Economic Opportunity Amendments of 1977' 



Be it enacted by the Senate and House of 
Representatives of the United States of America in 
Congress assembled, That the Economic Opportunity 
Act of 1964, as amended, is hereby amended: 

1. In Section 222(a) (12) in the second 
sentence by striking the phrase 
"winterization of old or substandard 
dwellings, improved space conditioning, 
and insulation;". 

2. This provision shall take effect 
October 1, 1978. 



nomtnrw. kavtiw. 



176 



NINETY-FIFTH CONGRESS 

Consrc5>s{ of tfje ^nireb Matt^ 

MANPOWER AND HOUSING SUBCOMMITTEE 

or THE 

COMMITTEE ON GOVESNVINT OPERATIONS 

RAVaURN MOUSE OFFICE B^J.:_01^4G. ROOM B-UVA 
WASHINGTON. 3.C. 20515 

November 2, 1977 



Dr. Grace Clivarez 
Director, Consnunity Services 

Administration 
1200 - I9ch Street, N. W. 
Washington, D. C. 20506 

Dear Dr. Olivarez: 

We have reviewed your response to the Cornmittee' s 
report, "Major Reforms Needed in the Conmunity Services 
Administration," H. Rept. 95-5 33 of August 5, 1977, and 
appreciate the thoroughness and g3r.er£l tenor of the 
response. There are, however, a rrunber of issues that 
were not specifically addressed ir. your response, and we 
would like to know the agency's position on them. Further, 
we have som.e questions regardir.g personnel strengths. 

One of our recommendatiorxS (2(g)) was that the Audit 
and Inspection Division chief should report to the Director, 
and that the Division should be significantly larger than 
the various elements previously charged with this respon- 
sibility. Your response stages that this office will be 
merged with the General Counsel division, which does not 
provide for direct access to ycu, and that the new office 
"will receive substantial increases in staffing," Please 
provide the number of inspectors and auditors in CSA (a) 
at the time you were confirmed as Director; (b) at the time 
of the Committee's report; and (c) today. 

Our report also called frr more field representa- 
tives and for the establishm.er.r of training programs. Your 
response states that Regional Offices will conduct training 
and technical assistance for coznunity action agency boards , 
executive directors, and selected staff members. Please 
advise us of V7hen this training began, its general character, 
and how many people have received it. We would also appre- 
ciate knovring the increase in the number of field represen- 
tatives as a result of your reorganization and when you 



I 



177 



expect to reach full staffing in this regard. 

In response to the Cotrjiittee' s recommendation that 
CSA follow the Comptroller General's audit standards, you 
said that the agency had initiated a pilot program which 
will permit evaluation of this approach. Please advise vis 
of the status of this program and also any progress in 
developing the alternative of awarding grants to State 
Economic Opportunity Offices for contracting with auditing 
firms . 

With regard to the accno~ic de'/alopmant corporations 
that have pre-viously been established with local initiative 
funds, your response indicates that continued funding of 
this activity is under review and that special conditions 
will be imposed on refunding ^ontil the review is completed. 
We would appreciate learning of your long-range plans re- 
garding these corporations, particularly the need to have 
CSA monitoring of their business ventures. 

There are a niimber of other issues in which we are 
interested that we believe can be explcred by staff contacts. 
The points listed above are ones that we believe are the most 
critical in your plans to implement the recommendations in 
the Committee's report. 

I would like to take this occasion to express to you 
once more my strong support for conrmunity action, and for 
the way in which your management team is moving to assure 
that anti-poverty dollars are spent effectively. As indi- 
cated in the most recent Committee report on CSA-supported 
anti-poverty associations, we stand strongly behind this 
approach. 

SincArely 7°^^^ ,^ 

^•CA'-DISS COLLINS 
Ch = i rrv'oman , Manp ow e r an d 
Housing Subcommittee 

CC:jlc 



178 



DEC 



1977 



DEC 2 9 1977. 



1741 
MFLoyd 



Ti^^m^^-^- 



U,QC^[) 



[~1 AC TIOH HAS BKCN COMPl 
[[3«EPUV UNNCCCSIART 

FILES COOROINATORr/n.iioij 



Jtonorable Cardisa Collins 

Chairwxaan 

Kimpower and Housing Subooosittea 

Coomlttee on GoArerrvnent Operations 

House of Repreaentativoa 

Washington, D.C. 20515 

Ooar Madam Chairwoman: 

Thcink you for the opportunity to make furtlier cx)rnB>ents on the 
CoEsaittee's report "Major Raforas Needed in the Qxaminity 
Sexvlcas Adainistration," H. Rapt. 9S-583 of August 5, 1977. 



In response to your letter dated November 2, 
like to EwJce the following observations « 



1977, I would 



* The nisabor of inspectors at the time of my confirmation, 
the Oomiittee ' a report and today, was and is nine. However, 
five laore inspector positions eure being added under the reorgaml- 
zationi three to be advertised this month amd two in Jamu£iry, 

At the time of my confimation and the Cocmiittee' s report, there 
were twenty- three auditors; because of a recent retirement, there 
are now twenty- two auditors. 

* The COEiaittee's report also recoBinended eun increase in field 
roprasentatives as well eis the establishment of training programs. 
The CSA regionitl office reorganization plan includes, not only a 
twenty-two percent increase in field representatives (increased 
from 153 to 198) but also more supervisory staff, 14 percent 
increase (increased frota 35 to 40) , rlus a 61 percent increase 

in technicail and clerical support in the form of Cccaminity Action 
Program Assistants emd Clark Typists (increased from «12 to 08). 
This significant strengthening of the support elemwnt will accom- 
plish two purposes: 1) It will free the field repres»»ntati'« 
from excessive paperwork amd office routine, thus permitting more 
tiJT» for direct contact with grantees, and 2) it will establish a 
career development opportxinity for potential field representative 
candidates. Full staffing will occur soon after all applicable 
CONCURRENCE?:^*^®^*^ personnel procedures are comolated. Position descriptions 
-a being ro wr ittuji, ci v i l "j 'g i.viuK c omr!> i 33 i o n req uirem e nts are — 



OFFICE CODE 



*i»eing met 



: <3wr 
ste 



ip-by-step, ard management- 



SICNATURE^ 



iw couptatezt; 



i 



union negotia 



tions are 



CSA FORM 10< JUN 



CONCURRENCE SHEET (Officiol File Copy) 
CPO a»o-7as 



179 



-2 - 

• A full-fledged training program will be Implemented when: 
1) the Increase In field representatives, along with supervisory 
and support staff takes place, and 2) the CSA regional staff 
Itself Is reoriented to the redefined assignment given to It. 

® While the two actions are being carried out, CSA Is doing 
the following: 

a. A new Training and Technical Assistance Division 
Is being developed under the Office of Regional 
Operations In CSA Headquarters. 

b. Regional Directors are holding grantee meetings to 
Inform board chairpersons and executive directors of 
new directions and responsibilities. Subsequent 
meetings will focus on skills needs assessments and 
regional Inventories of existing training and tech- 
nical assistance resources available. SEOOs will 
assist in this effort. 

c. Past experiences In TSTA efforts are being reviewed 
so as to learn fron both good and bad efforts. The 
results should be beneficial In not "re-inventing 
wheels" and not repeating mistakes. The general 
character of training will be one of less emphasis 
on national consultant contracting and more involve- 
ment of individuals and groups that have connunlty 
credibility. Areas for TSTA will Include outreach 
methods and techniques, management skills development 
In administration policy-making, as well as grass-roots 
advocacy planning. 

** Concerning the Conmittee's reconmendatlon that CSA follow the 
Comptroller General's audit standards, I responded that CSA had 
Initiated a pilot program to assist the evaluation of this approach. 
The pilot program has not progressed beyond collecting and reviewing 
data required for selection of the most appropriate state for this 
experiment. The alternative of using an SEOO for audit contracting 
has not yet progressed to the point of selecting the SEOO contractor. 
In light of other priorities, these two alternatives may not be in 
place before the end of the fiscal year. 

* In relation to the economic development corporations previously 
established with local initiative funds and the need to have CSA 
monitoring these corporate business ventures, ny staff and I have 
completed a review of this subject. Enclosed please find a memorandum 



r 



25-371 O - 78 - 13 



180 



- 3 - 



prepared by the Assistant Director for Legal Affairs and addressed 
to our policy review board. The raemoranduoi discusses the legality 
of providing Title II financial assistance In support of economic 
development activities as well as recomendatlons concerning appro- 
priate measures to be followed In monitoring these activities. 

If I can be of further assistance, please do not hesitate to contact 
t)e. 



Sincerely, 



%7' (Ir^Ja (Ljr.c.) GLa^ 

Graclela (Grace) Ollvarez 
D1 rector 





1=3, 



X. 



181 



MAGGIE FLOYD 

AEPorter 1-25-78 

U» D 



3 FEB 1978 

Honorable CarrUss Collins 

eovemanent Operations SubcoB»1tt5« 

on ^!a:npow«r and housing 
House of KepresanUtives 
Wasfi1»5toii, D. C. 20515 

Dear J'adJia Chalrvosan: 

I appreciate this opportunity^ to corrsient on the report tssuc^ 
by the House Co«aUtee on Covernt^ent Operations entitled, 
•Operation of CSA-Suppcrteii Antlpoverty Associations," 
H. Kept. 95-709. 

A previous report 1ssufc<! by your Corailttee, ccnccrnlncj ^«ajor 
Reforrrts fUif^dcd In t»*i« CoJp^unlty Services Adnlnlstratlon,* 
addressed tN» ranac/ereRt probleriS of t'^e associations and 
questioned thair usefulness within the antlpoverty cowsjutUty. 
(ii. Rcpt, 9:'i-5£3, Aug. 5, 1977.) That report recoPiaendfcd 
that CSA study closely thes« ssseclatloos 1ft order to assess 
the advisability of continued CSA support. 

As acknowledged by the Cop«1ttee in the report presently discussed 
concfimino th« associations, CSA Inlttatftd decisive erasures to 
correct these probloit* even beforo the report was issued. Cn 
Septewber 14, 1977, we Informed all CSA directors and all 
chairmen of CAA boards of directors that CSA approval would 
not be forthcowino on the use of grant funds to support pro- 
fesslonal association activities until there was a channe In 
the leadership of these associations and co»iipl1ar^e with 
rcrsilatory and audit safe*^Jards. This was CSA's first step 
In insuring the fiscal and proorairma tic Integrity of th'^so 
organisations. CSA has continued Its efforts to this effect 
as evidenced by new CSA rjle and criteria derU^^i In part 
froR. suc^yiistlons within the Coffiff»1tte«'s report ref-ardlng 
tha associations. 



182 



hlAGGIE FLOYD 

AEPorter 1-25-78 



LA» D 
2- 



• The first reccnmendation stems from the Committee findings 

conceminq urlsinanagement within professional associations sup- 
ported directly or Indirectly by CSA, and the need to guarantee 
that these associations further the objectives of the Economic 
Opoortunlty Act (EGA). CSA has Issued new requatlons governing 
the use of CSA funds for irieRibershlp dues and other CAA expenses 
relating to these associations. CSA has also revised travel 
ronulatlons for grantees and delerjate agencies. See Attachment A, 
42' FR 63171 anii 42 FR 59604 respectively. 

The reoulatlon concerning nef>«bersh1p dues paid to professional 
associations establishes criteria for review and approval under 
which th*; CSA Adwinlstering Office will assure that grant funds 
are exp--n<Jed for purposes outlined In grants awarJed under 
the EGA. See 42 FR 53171 S1068.30-3. ~Where warranted, accept- 
ability of the organizations as recipients of dues from grant 
funds will be detennlncd based on the findings of audits con- 
ducted by CSA or by a third party on CSA's behalf. These findings 
nust Indicate that the organization has an acceptable track 
record based on factors such as: federal access to records; 
adnlnlstratlve capability; fiscal Integrity; clear recordkeeping, 
including travel expenditures; and democratic elections. An 
organization found to be unacceptable will be listed under 
Attachment A of the regulation. Conseguently, CSA will disallow 
any expenditures of grant funds Incurred in activities sponsored 
by that organization. 

The Cownlttce's report specifically addresses nanagenent problents 
within the ;iat1onal Association for Cownunlty Developnwnt (NACD) 
and the National Cornnunlty Action Executive Director's Association 
(NCAAEDA). At present, NACO does not neet proper standards. 
Any expenditure of CSA funds by grantees for dues or other costs 
relating to .MACD will be disallowed. This action was taken 
basetl on the Coranit tee's findings and subsequent Inaction on 
HACD's p^rt to effect a change in leadership within the 
association. The NCA/iEDA, on the other hand, has ccrrsplet^d Its 
reorganization satisfactorily. The new leadership elected by 
this association Is coinmitted to changes which will satisfy 
CSA criteria. 



183 



MAGGIE FLOYD 

AEPortcr 1-25-78 

LA, D 



CSA travel regulations, as amended, further control travel^. The 
current regulations eliminate the previous exception In the rule 
which allowed travel to meetings of professional associations 
without prior CSA approval. Limitations are Imposed for travel 
outside the Federal Region limits; approval for out-of-reglon 
travel trust be requested at the titae of funding or refunding by 
Itemizing these costs In the budget submission. In addition, 
review criteria have been established which are to be considered 
by the grantee official responsible for approving travel. These 
guidelines specifically provide that all travel requests elicit 
"a direct benefit to the achievement of an objective related to 
the agency's mission and the objectives of the Economic Opportunity 
Act," See 42 FR 59504. Section 1069.3-4 (c){l)(1). 

• Your second reconrnendatlon urged CSA to assure that 
professional organizations do not support lobbying organizations. 
The newly Issued regulations give CSA the power to declare any 
professional organization, supporting or otherwise Involved in 
linproper lobbying activities, an unacceptable organization. This 
action would nake all further grantee support of such organization 
an illegal expenditure of CSA awarded funds. In using this new 
authority, CSA will be guided by the lobbying restrictions currently 
applicable to all CSA grantees, set forth In GEO Instruction 
6907-01 . See Attachment B. 

• Recoipraendatlon three stressed the need for CSA to examine 
the structure and operation of the National Center for Cownunlty 
Action (NCCA). On Septeaber 30, 1977, a contract was Issued 
for an evaluation of the National Center for Community Action. 

The contractor, BLK Group, Inc., expects to copnplete the evaluation 
In January, 1978. The study Is designed under the technical 
approach methodolooy. All cojT»)onents of the HCCA are being 
evaluated to deten?i1ne: 

— the quantity of services provided by NCCA. 

— the Injpact of such services on CSA grantees. 

— the cost effectiveness of the various service 
units provided by NCCA. 

— alternative inebhods for providing such services, 
those In use by other Federal agencies. 



184 



MAGGIE FLOYD 

AEPortor 1-25-78 



.ij. LA. D 



— KCCA*s progress toward Its five-year rjoal of 
financial IrhJependGnce, IriCludljig an analysis of 
the econoiBic feasibility of the rjran toes' future 
plan and a report on the projections and per- 
formonce of past plans. 

— a description of the formal and informal relation- 
ships between NCCA and th< various grantpe 
associations,^ including the extent and awount of 
tICCA resources utilized by the associations. 

I will be happy to inforw th* Cowulttoe about the evaluation 
results as soon as they ixr<f available. 

In addition, CSA has placed a clearly stated special condition 
on the NCCA grant. Essential ly, the special condition enphasizes 
adherance to the restrictions concernirtg lobbyloo activities, 
travel and membership dues paid to professional orrjanizations. 
Won-co?Pf>l lance would result in imediate suspension of funding 
and temiinatlon of the evaluative process. 

Once aqaln, I thank you* for the opportunity to apprise the 
CoriTilttee of neasurcs taken by CSA concerning the anti poverty 
professional associations since the Issuance of your report. If 
I can provide further Infomation please do not hesitate to 
contact iTK, 

Sincerely, 



Graclela (Grace) Ollvarez 
Director 





1 



185 



\^OmniUTllty Washington, d.c. 20506 4^i^ 

Services Administration 11 

SEP 2 1977 



Honorable Cardiss Collins 

Chairwoman 

Government Operations Subconmittee 

on Manpower and Housing 
House of Representatives 
Washington, D.C. 20515 

Dear Madam Chairwoman: 

I appreciate the opportunity to comment on the recently issued 
House Government Operations Committee's Report "Major Reforms 
Needed in the Corrmunity Services Administration." 

Since assuming the duties as Director of the Conmunity Services 
Administration (CSA) on April 29, 1977, I have been carefully 
reviewing and assessing the agency's renewed commitment to the 
Nation's poor and their needs in the late 1970s and 1980s. Ours 
is a mission unique in the Federal government, intricately 
interwoven with the patchwork array of public, private, Federal, 
state and local attempts to deal with poverty. I strongly 
believe effective, committed leadership and direction are pre- 
requisites to achieving the goals of alleviating poverty. 

Reviewing the operations of the agency, and its proper role at 
this challenging time in our history has been a constructive 
and edifying experience. As the Committee is no doubt aware, 
this process began early in the Carter Administration when a. 
team from the White House was asked to undertake a review of CSA 
for the President. The initial assesments and recommendations 
of this team provided me, and the new management team I assembled, 
with a good overview of the agency and the framework for a more 
extensive and comprehensive look at its strengths and weaknesses. 



186 



Hand in hand with this assessment went a policy evaluation of the 
needs of the poverty community and this Nation in addressing the 
problems poverty currently presents. Both of these assessments 
are continuing components of my administration and both have 
already made important contributions to our initial directions 
and decisions for improving CSA's day-to-day effectiveness, 
as well as its overall impact in the poverty community. 

I found the committee's Report and Recoirmendations consistent 
with much of my own brief experience and with many of the steps 
already underway to correct management deficiencies and increase 
CSA's credibility and efficacy at the Federal, State and local 
levels. 

Your first recomnendation stressed improved management within 
the agency, implementation of the pending reorganization and 
higher standards of performance. 

When I took office, I discovered that a proposed Organization 
Chart, dated July 1976, had been approved by the Office of 
Management and Budget, as was required by the CSA Act of 1974. 
After review of the structure, it was determined that further 
clarification was necessary to reflect, from a management 
standpoint, the priorities of the new Administration. 

I ordered an immediate evaluation and review of the existing 
structure and functions of the Agency, separated into two 
components : 

1. Headquarters functions 

2. Regional Office Functions 

In order to review these matters, a detailed assessment process 
was begun which included evaluations through personal inter- 
views with every employee in the Regional Offices and most 
Headquarters Offices. As a result, beginning on July 29, 1977, 
a new series of Agency instructions began to be issued, setting 
forth the new Headquarters realignments in terms of structure 
and function. (See Attachment A). This included the detailed, 
new organization charts which are included in Attachment B. As 
a result, the reorganization of the Headquarters is in place 
structurally. A detailed reorganization plan for the Regional 
Offices will be submitted to the Conmittee no later than October 20, 
1977. 



187 



The second major component of any reorganization is insuring 
that the individuals are working in jobs that need to be done and 
performing those jobs in an efficient and acceptable manner. To 
that end, the Agency has requested, on a high priority basis, special 
authority from the Civil Service Commission which will allow us to 
address that problem in a timely fashion. (See Attachment C). 

It is anticipated that this authority will be forthcoming shortly. 
If it is, we will be able to move the requisite personnel in a 
sequential fashion office by office, thus providing the greatest 
flexibility in those areas which are in the highest priority, i.e.. 
Office of Community Action, Audit and Inspection, etc. 

It was clear that the procedures in place to evaluate Agency 
personnel had suffered from maladministration and disuse. There- 
fore, a task force of key agency officials was established and 
ordered to produce a new set of procedures addressing the question 
of performance evaluation and supervisory accountability. Since 
that time, the Agency has instituted new supervisory training 
programs, which are of a continuing nature, and is presently re- 
fining the draft proposals for performance evaluation as well as 
requesting additional technical assistance from Personnel Specialists 
with the Civil Service Commission. We anticipate that we will be 
prepared to enter into negotiations with our Union on these questions 
by the latter part of October. 



As a continuing part of our effort, we also are instituting 
a new series of training programs for our key employees, especially 
the field representatives in the agency. The Office of Community 
Action, in coordination with our Training Office, has already begun 
designing and developing a new training program for Field 
Representatives to insure that they are well -equipped to do the job 
in the correct manner. We anticipate the initiation of the 
first training sessions by the early part of November, 1977. 

Similar training programs for our supervisors, in the area 
of Labor-Management Relations, have already been developed 
and will be conducted by the Civil Service Commission in con- 
junction with our staff. This training contract has already 
been agreed upon and will begin on October 12-14, 1977. It is 
a clear commitment on the part of this Administration that we 
will develop and insist upon the highest standards of performance 
from our employees; the above-mentioned specifics are but the 
first step in these efforts. 



25-371 0-78-14 



188 



Recommendation one also strongly urged a high priority on our 
monitoring, review and evaluation efforts with respect to the 
functioning of programs the agency administers. 

Several initiatives are underway to implement this recormendation. 
During FY '78, there will be several major evaluations of CSA's 
national emphasis programs, notably. Community Food and Nutrition, 
Rural Housing Repairs, and State Economic Opportunity Offices. 
There will be research into the effect of the Crisis Intervention 
Program, plus an impact evaluation of the Energy Conservation 
Program and the Community Economic Development Program. Efforts 
are also underway to develop standard procedures and instruments 
for the evaluation of grantees on a one-to-one basis. A guidance 
manual on how to meet the CSA standards of program effectiveness 
has been published and sent to all grantees. (Attachment E). 
A revised policy instruction on grantee self-evaluation and 
reporting for CAAs and LPAs is now in effect. (Attachment F). 

The Office of Conmunity Action and the Office of Policy 
Planning and Evaluation will work together so that all CAAs 
will be the subject of a Type III evaluation at least once 
every three years. One million dollars will be set aside 
each year for the project, which begins in FY 1978. 

Your second recommendation went to the heart of the administrative 
responsiblity of the agency in overseeing its grantees and insuring 
the effective expenditure of Federal funds through increased 
technical assistance, sufficient field staff for monitoring and 
review, increased quality control of audits, and increased, and 
better coordinated, audit and inspection functions. 

Regional Office personnel will provide a regular program of 
training for grantees. CSA auditors will do a Training and 
Technical Assistance (T &T/A) session for auditors who serve 
CAAs. CSA regional offices will also conduct T & T/A for CAA 
boards. Executive Directors and selected staff members. These 
sessions will stress the responsiblities and duties these 
individuals have and various management models that have been 
successful in the past. There will also be training sessions 
conducted by the Regional Offices in property management, 
personnel management and accounting systems. The effort will 
extend throughout FY 1978. 

The Comnunity Services Administration is conducting an extensive 
study of its Regional Offices. Systems and processes will begin 
to be reorganized by October 1, 1977. The new system will reduce 



m 



the clerical work imposed on field representatives so that they 
can spend more time in the field with grantees. These changes 
will be implemented in the first quarter of FY 1978. 

The report on Regional Offices due on October 1, 1977, will 
outline a new and concise system for grant processing and compli- 
ance review. There will be clear assignments of responsiblity 
for reviewing documents at ewery step of the process. This system 
will also be implemented during the first quarter of FY 1978. 

In conjunction with the requirements of 0MB Circular A-110, 
"Uniform Administrative Requirements," CSA has implemented revised 
self-evaluation and reporting procedures which will (a) simplify 
the way information is reported (b) tie reported information to 
the grantee's program goals and the CSA standards of effectiveness 
and (c) schedule program reporting to coincide with financial 
reporting. These steps should make program progress reporting 
more useful and timely for both the grantee and the CSA Regional 
Offices. Finally, CSA Regional Offices will be required to review 
grantee program progress reports as part of the process of certifying 
that they are meeting the CSA standards of effectiveness and are 
therefore eligible for refunding. 

Prior to the issuance of the Committee's Report, CSA had already 
placed a high priority on its monitoring efforts by reorganizing 
the formerly separate Inspection, Audit, Human Rights, and General 
Counsel Division into one office to serve as the enforcement arm 
of the Agency. This office, the Office of Legal Affairs and 
General Counsel is now headed by a Presidential ly appointed 
Assistant Director who has been delegated the responsibility for 
insuring that CSA law and regulations are religiously followed 
by CSA employees and grantees. The new office will receive 
substantial increases in staffing in order to carry out its new 
mandate. 

Among the changes already accomplished or currently underway with 
the assistance of the new Office of Legal Affairs are the more 
flexible use of partial non-refunding or suspension of ftmds 
rather than limiting CSA to the single option of writing off all 
funding, which is so severe a measure that it was at times in the 
past used as an excuse for doing nothing. Access to all appropriate 
bank accounts, both CSA and private, will be assured by either 
'regulation or grant conditions. Where an illegal expenditure of 
CSA funds by a grantee results in certain individuals illegally 
receiving such funds, they will be recovered by means of civil 



190 



lawsuits initiated by the agency against the individuals, rather 
than by merely disallowing grantee expenditures. Legislative 
changes have been suggested and adopted by the Administration 
which will clarify CSA's legislative authority over the control 
of funds awarded for economic development corporations. Title II 
funding of economic development is being brought under control. 
Conflict of Interest regulations are being strengthened. New, 
more responsible travel regulations and membership dues regu- 
lations have been published. The regulations regarding payroll 
deductions for political activities have been formally reinterpreted 
and published. 

The External Audit Division will substantially increase 
its review of grantee audit work papers, reviewing on a random 
basis the work of at least 10 percent of the 1,450 independent 
grantee auditors. 

Each of the 1,750 audit reports received by the External Audit 
Division is reviewed under current practices; also a hundred or 
more audits are performed directly by the staff of External Audit. 
Recommendations and requests based on these reviews are in each 
case forwarded to the responsible CSA program official for action. 
The new Office of Legal Affairs is now responsible for insuring 
a proper response to these recomnendations and is establishing a 
systematic process for pinpointing responsibility and establishing 
deadlines for response and action. 

The entire process of disallowing grantee costs questioned by 
auditors is under review by the Office of Legal Affairs with the 
goal of shortening the time between a cost being questioned and 
the agency making a binding determination. 

CSA concurs in the recomnendation that special attention should 
be paid to travel and consultant costs. This will be done by 
requiring the submission of a budget showing more detailed proposed 
expenses in seven or more cost categories, by reducing the percent- 
age of allowable transfers of funds between cost categories, by 
requiring that audit reports match actual costs incurred with . 
budgeted amounts so that any discrepancies will be highlighted, 
and by greatly restricting retroactive approval of costs incurred 
in cases where prior CSA approval is required. 

In order to further tighten the allowance of questioned costs. 
External Audit Division will be charged with the responsibility 
of reviewing on a quarterly basis a statistical sampling of the 
actions taken by program officials to allow questioned costs. 



191 



Regional Directors and Program Office Heads will also be required 
to take concerted action to clear CSA's records of unresolved 
costs, especially those outstanding for years prior to FY 1977. 
The Director's office will provide specific guidance to all Regional 
and Headquarters Office Heads to accomplish this task. 

If a grantee has not submitted an acceptable audit report for 
the latest full program year prior to the refunding action, 
agency policy will be to deny refunding until the required 
audit is submitted. Exceptions to this policy will be very 
rare and will require strong justification from the grantee. 

The Cormi ttee ' s Report has recornnended that CSA directly 
contract with CPAs to audit grantees rather than permit grantees 
to choose and pay for their own auditors. There are decided 
advantages to direct contracting, particularly the removal of 
any possible obstacle to the auditor's independence. Yet, direct 
contracting is no guarantee that the auditor will perform in 
an unbiased, objective manner. Random quality reviews by CSA 
of CPAs work would still be necessary. 

The chief disadvantage to the direct contract approach is its 
high cost. To establish a CSA contracting capacity sufficient 
to obtain more than 1450 audits yearly would require a large 
increase in CSA personnel and other expenditures which would 
not be offset by the savings to the grantees. Compliance with 
Federal procurement regulations and Small Business set-aside 
requirements is technical and costly. 

To gain sufficient experience with the advantages and the 
costs of direct contracting, CSA will initiate a pilot 
program in a defined geographic area in which we will attempt 
to contract directly with CPA firms to audit the grantees in 
that area and will evaluate this approach to determine its 
feasiblity on a broader scale. In the meantime our expanded 
program of quality assurance should provide an adequate 
indicator as to the sufficiency of CSA audits. 

We are also reviewing an alternative procedure of awarding 
a grant to a State Economic Opportunity Office or other 
state-wide grantee to handle the administrative burden of 
contracting with CPA firms with the advice and approval of 
our Regional Auditors. 



192 



In order to insure against a recurrence of the agency practice 
of ignoring requests for inspection or failing to act on infor- 
mation revealed by Inspection or Audit reports, a new formal 
system has been adopted by the Office of Legal Affairs. In order 
to pinpoint responsibility for action, all inspection requests 
or allegations which would call for investigation are now forward- 
ed in writing to the Office of Legal Affairs. The General Counsel 
has the sole authority and therefore the responsibility for ordering 
or denying an Inspection Divison investigation. Regional Counsels 
have been informed that Regional Offices are to forward, in all 
cases, any informaton or allegations which might call for a decision 
to officially investigate. A written record is now kept of all 
requests, approvals, denials, reports and actions taken. Findings 
based upon inspection reports are made by General Counsel and 
forwarded to the responsible program office with a directive that 
a written response, detailing the action taken by the program office, 
be forwarded to General Counsel within 14 days. The Inspection file 
is not considered closed until the General Counsel has concurred in 
the action taken by the program office and has personally closed the 
file. The authority for this new system is contained in CSA 
Instruction 1500-1. (Attachment G). 

While not yet completed, a uniform operating process is being 
developed for Audit Division findings which will afford the 
same assurances of responsible action and pinpointed responsi- 
bility that are now in operation for the Inspection Division. 

The Committee's second recommendation also addressed the 

ConiTii ttee ' s concern with the administration of Title VII grants 

for economic development. 

A number of effective controls over Title VII economic develop- 
ment programs are available under current law and regulations 
but in the past were not always used. Under the new Administration, 
existing control mechanisms are readily used as needed. For 
example, when one grantee obtained funds from the Department of 
Treasury far in excess of that allowed by CSA or Treasury regulations, 
the grantee was forced under threat of suspension to repay the sums 
thus obtained. And when a second grantee denied CSA access to 
certain bank accounts, which it claimed were private, the grantee 
relented when faced with a similar notice of intended suspension. 
While effective controls do exist, they are being reviewed and 
added to as needed. For example, certain conflict of interest 
provisions are being made applicable to non-profit organizations 
exempt under past interpretations. 



193 



The controls over economic development activity carried out 
with local initiative funding under Title II are not completely 
effective, and the Office of Legal Affairs together with the 
appropriate program offices, is reviewing the legal and policy 
implications of continued funding of Title II economic development 
activity. Until the review is completed, special conditions are 
being imposed on the refunding of CAA's who proposed to continue 
economic development with local initiative funds. These conditions 
will provide adequate controls until new regulations and policy 
are in place. 

Limited forms of economic development activity under local 
initiative funding are not only legal but in certain cases desir- 
able. Effective control mechanisms are possible and will be 
imposed. However, major economic development involving the use 
of venture capital in impact areas will not continue to be funded 
with local initiative or other Title II funds. Such activity will 
be assisted only with Title VII funds, subject to Title VII 
strictures. 

A major policy research study has just been completed which analyzes 
the structure of the Community Economic Development Program and 
presents to CSA a set of alternative formal program designs. These 
design alternatives will become the basis for a statement of policy 
on the nature and characteristics of the program. Currently, a 
sample of Community Development Corporations is being assessed on 
a plan-versus-performance basis. Among other things, this study 
will yield the design parameters for an impact evaluation of the 
program to be initated in FY '78. 

CSA agrees that monitoring, review and evaluation efforts are 
also high priority items for Title VII grantees. To this end, 
action has been taken to establish the necessary data base, develop 
a functional MIS and begin the quality as well as quantity ranking 
of CDCs. 

CSA's Office of Economic Ddevelopment (OED) has initiated 
the development of program assistance and monitoring standards. * 
An especially di-fficult task is the presentation of the 
information required to demonstrate the impact of the OED 
Program beyond "business ventures." Capacity building, infras- 
tructure development, impact on planning and institution building 
are also key elements. 



194 



Impact evaluation, incorporating analytical, quality based 
measurement of all of the programs assets and liabilities will be 
initiated in FY '78 and continue through FY '79. In the interim, 
viable and competency based ranking criteria will be developed 
and applied to all program elements. 

It is apparent that some grantees and internal OED units have 
been operating without proper standards and/or review criteria. 
The standards of performance for staff and program audits are being 
set and maintained. Because poor practices have been allowed to 
develop over a period of three (3) to five (5) years, some grantees, 
who are being disciplined and required to correct their problems are 
having difficulty in accepting the actions being taken. The OED 
reports endorsement and support for its actions from most grantees. 

Specific actions being taken to date include: 

1. The Auditing Reports and Monitoring Reports 
submitted to the OED are being reviewed for 
sufficiency and compliance with standards 
of sound program and fiscal control. Par- 
ticular attention is given to the grantees 
ability to submit audited financial state- 
ments, meet reporting deadlines and submit 
consistent data. A grantee which had a 
three (3) year history of open audits, 
inability to meet non-Federal share, no 
satisfactory response to disallowed costs, 
an improperly constituted board and an 
ineffective staff was terminated. 

2. The tracking and collection of performance 
data in program areas is being finalized. 
From this effort, an effective data base 
will be generated and an MIS put in place. 
This will be finished in FY '78. 

3. Financial audits which reflect performance 
and the asset/liability structure of each 
grantee are being developed. 

4. The implementation of an OED operated Management 
and Technical Assistance Program is being finalized. 
CSA will no longer endorse the random and often 
ineffective use of consultant services for its 

own staff or grantees. The utilization of manage- 
ment as well as financial accounting standards 
will be sine qua non in the OED program. 



195 



The OED program will not reflect significant expansion in 
FY '78. Instead emphasis will be placed on: 

1. Maintenance and development of at least 
the current number of grantees. 

2. Implementation of the Rural Program. 

3. Implementation of the Monitoring and 
Technical Assistance Program. 

4. Improving staff performance. 

The third recommendation urges increased CSA support for regional 
offices with respect to proper staffing and annual review. 
As mentioned earlier, the Office of Community Action has already 
sent a management team to each regional office preparatory to 
submission of a comprehensive regional reorganization plan on 
October 1, 1977. This plan will include systems to be implemented 
and standards of effectiveness for each regional office. 

The new Office of Regional Operations within Headquarters will 
be strengthened by the addition of a management information system, 
expanded budget unit and regional desk system. This will enable 
Headquarters to continuously monitor the performance of Regional 
Offices. 

CSA agrees with the recommendations, contained in the Committee's 
fourth recommendation, regarding CSA support of professional 
association membership and activities and has already published 
new regulations in this area. 

These regulations will prohibit the use of CSA funds to pay for 
any membership dues or organizational fees without specific prior 
CSA approval. CSA now has controls preventing its funds from 
going to organizations which are inappropriate or which refuse 
to meet certain audit, inspection and performance standards. CSA 
is in the process of drafting, and by November 5th will have completed, 
the standards required for CSA approval of various organizations. 
For those professional organizations, such as the National Association 
for Community Development (NACD), which are primarily supported 
through CSA funding of NACD membership dues, CSA approval will depend 
upon complete access to records, and submission to CSA audit controls, 
and to appropriate CSA travel, consulting, reporting and other 
regulations. For those professional organizations, such as the 
National League of Cities, which receive only minimum support through 
CSA funded membership dues, approval will only be dependent upon 
progranmatic relevance. 



196 



The use of CSA funds to travel to organizational functions 
across the country will be controlled by a recently published 
regulation which requires prior CSA approval for such travel. 
Again, by November 5th, the standards under which CSA will 
approve out-of-state travel by grantee employees and the number 
of employees for which travel will be approved will have been 
defined and in operation. 

The Committee's fifth recommendation , urging CSA to 
assume its role as the government agency designated to repre- 
sent the poor, is, for me, of extreme importance. I accepted the 
responsibilites and the challenges the President offered me with 
this appointment with the full understanding and conviction that 
this agency's primary role was that of advocate for the poor and 
that role had to be reactivated at all levels for us to resume 
effectively waging the war on poverty. 

One very important factor in resuming our role as advocate has 
been our establishment of the new Office of Interagency and 
External Affairs whose mission is to effectively mobilize the human 
and financial resources of the Nation to combat the problems of 
poverty. This office's goals are advocacy, resource mobilization and 
institutional change and all of its activity will be directed to 
the attainment of these goals. 

Specific activites include: 

Developing and recommending plans and programs 
to coordinate and influence the activities and 
resources of Federal, state and local government 
and the private sector in combating poverty; 

Strengthening existing relationships and new 
initiatives between and among all levels of 
government and the private sector concerning 
anti -poverty activities; 

Assisting in the development of agency policies 
and programs as these affect other Federal 
agencies, state and local governments and the 
private sector and relationships between these 
and agency offices and grantees; and 

Coordination of agency participation in acti- 
vities regarding Federal coordinating councils 
and the Undersecretaries' Working Group. 



197 



In the past, CSA's efforts to work with other Federal 
agencies and the private and public sectors have been 
hindered by the lack of emphasis and focus on building 
working relationships with these groups by the leadership 
of the Agency. 

CSA realizes that it does not have all the resources neces- 
sary to meet the needs of the poor and that without the cooperation 
of and resources of other agencies, these needs will not be met. 
In addition, the lack of coordination and cooperation will result 
in duplication of effort and program activity. As one example of 
this cooperation I attach a list of the interagency agreements 
currently being developed at CSA. (Attachment H). 

CSA will work to strengthen advocates at other levels, such 
as SEOOs because, without these advocates, the CSA can not fulfill 
its mandate. One of the first steps in insuring "that these 
offices are functioning effectively is an assessment of current 
SEOO activity. CSA will also provide for the measurement and 
evaluation of the impact of all programs authorized by the Economic 
Opportunity Act of 1964, as amended, and of poverty-related 
programs authorized by other Acts to determine their effectiveness 
in achieving stated goals, impact on related programs and the 
structure and mechanism for delivery of services. 

Following the assessment of their activities, the CSA 
will review CSA policy on the role of the SEOOs and develop new 
policies or revise existing policies that will assist SEOOs in 
defining their roles and carrying out this mission. 

Regional Offices and CSA Headquarters work closely with SEOOs 

to correct deficiencies in grantee performance. There has 

not been an overall national assessment of SEOO effectiveness in 

meeting their legislative objectives due to a shortage of staff 

and the lack of evalation capability. The on-going evaluation process 

utilized in place of a more "formal" process includes evaluation 

of the following: 

1) Self-evaluations, utilizing program progress 
reports which measure activities against goals and 
objectives as set forth in an approved work program; 

2) On-site monitoring visits by Regional field 

staff; 



198 



3) Informal on-site team assessments of grantee 
performance; 

4) Review of financial and auditing reports, and 

5) Joint Regional/SEOO quarterly meetings to discuss 
problems, and exchange information. 

The management information system developed at Headquarters 
will provide a comprehensive assessment of the needs of the 
nation's poor. It will utilize and track information gathered 
from all CAAs and their delegate agencies. CSA will make this 
information available to other Federal agencies and Congress 
to continue its role as advocate for the poor. We hope to have 
this system operational by the second quarter of FY 1978. 

CSA is funding a number of innovative demonstration programs 
with a strong research and evalutaion component to measure not 
only success rates but the potential for spinoff and replication on 
a larger scale following the period of demonstration. 

As President Carter has stated, CSA should be the national 
laboratory for poverty related research and demonstrations. 

Among the program demonstrations with potential for repli- 
cation or spinoff to another Federal agency are the National 
Demonstration Water Project, the Menninger Foundation Group 
Homes Project and the Elderly Victimization Prevention and 
Assistance Program. 

There are other demonstrations in the areas of rural housing, 
health, education and economic development. Mew demonstration 
initiatives either being considered or recently begun include 
energy conservation for low-income district schools, a statewide 
computerized information and referral system (in Michigan), and 
assistance to organizations dealing with undocumented workers 
("illegal aliens"). CSA's broad mandate to assist the nation's 
poor permits it not only to undertake specific program demonstrations 
but to examine how different types of programs relate to each 
other in making up a total support system for the poor. 

In closing I would like to say these are only some of the new 
directions underway at CSA. We look to you in Congress to assist 
and guide us in our efforts. 



199 



As you know, we have proposed legislative changes pending before 
both houses of Congress at this time; changes, I believe, will 
strengthen our efforts to revitalize, reorganize and redirect the 
agency. A copy of the proposed legislation I transmitted to the 
Congress on July 21, 1977 is attached. (Attachment I). 

Again, allow me to express my appreciation for the opportunity 

to bring the Committee up to date on our activities at CSA since the 

release of your report. 

If I can provide further information, or clarification on any 
of the activities set out above, please do not hesitate to 
contact me. 

Sincerely, 



Graciela (Grace) Olivarez 
Director 



Of fir 



200 



95th Congress 
1st Session 



A BILL 



To extend for three additional years the authorization of 
Titles 1, II, III-B, VI / VII and IX contained in the Economic 
Opportunity Act of 1964, as amended, and for other purposes. 

Be it enacted by the Senate and House of Representa- 
tives of the United States of America in Congress assembled, 
that this Act may be cited as the "Economic Opportunity 
Amendments of 1977."!. 

Statement of Purpose 

Sec. 2. It is the purpose of this Act to extend 
programs under Titles I, II, III-B, VI, VII and IX of the 
Economic Opportunity Act of 1964, as amended. 

Authorization of Appropriations 

Sec. 3. (a) Section 237 of the Economic Oppor- 
tunity Act of 1964, as cimended, is amended by striking out 
"two succeeding fiscal years" and inserting in lieu thereof 
"six succeeding fiscal years". 

(b) Section 245 of such Act is amended by striking 
out "eleven succeeding fiscal years" and inserting in lieu 
thereof "fourteen succeeding fiscal years." 

(c) Section 321 of such Act is amended by striking 
out "eleven succeeding fiscal years" and inserting in lieu 
thereof "fourteen succeeding fiscal years." 

(d) Section 615 of such Act is amended by striking 
out "eleven succeeding fiscal years" and inserting in lieu 
thereof "fourteen succeeding fiscal years." 

(e) Section 703 of such Act is amended by striking 
out "two succeeding fiscal years" and inserting in lieu 
thereof "six succeeding fiscal years, to remain available 
until expended." 

Sec. 4. Section 15 of the Heads tart. Economic 
Opportunity, and Community Partnership Act of 1974 is amended 
to read "For purposes of carrying out Titles I, II, 
III-B, VI, VII and IX of the Economic Opportunity Act of 1964, 
as amended, there are authorized to be appropriated such 
sums as may be necessary for the period ending September 30, 
1979 and each of the two succeeding fiscal years.". 



201 



Sec. 5. (a) Section 211 of the Economic Oppor- 
tunity Act of 1964, as amended, is amended in subsection 
(b) thereof to read: "Each board to which this sub- 
section applies shall consist of not more than fifty 
one and not less than fifteen members and shall be so 
constituted that (1) one third of the members of the 
board are current elected public officials, or their 
representatives, except that if the number of current 
elected officials reasonably available and willing to 
serve is less than one-third of the membership of the 
board, membership or> the board of appointive public 
officials may be counted in meeting such one-third require- 
ment, (2) at least one-third of the members are persons 
chosen in accordance with democratic selection procedures 
adequate to assure that they are representative of the poor 
in the area served, and (3) the remainder of the members 
are officials or members of business, industry, labor, re- 
ligious, welfare, education, or other major groups and 
interests in the community. Each member of the board selected 
to represent a specific geographic area within a community 
must reside in the area he represents. No person selected 
under clause (2) or (3) of this subsection as a member of a 
board shall serve on such board for more than three conse- 
cutive years, or more than a total of seven years." 

(b) Section 222(a) of the Economic Opportunity 
Act of 1964, as amended, is amended — 

I (1) In Subsection (11) thereof in the third sentence 
by inserting after the words "Mainstream programs", "and 
programs under the Comprehensive Employment and training 
Act of 1973". 

(2) Subsection (13) thereof is amended to read: 
"A program to be known as "Summer Youth Recreation" designed 
to provide recreational opportunities for low-income children 
during the summer months. Funds made available for this 
section shall be allocated by the Director among community 
action agencies where feasible ^ or other public or private 
non-profit agencies where no such community action agency 



202 



exists or is able to administer a program to provide 
recreational opportunities for low-income children 
during the summer months . " 

(c) Section 225 of the Economic Opportunity 
Act of 196 4, as amended, is amended in subsection (c) 
thereof by substituting for the first sentence "Unless 
otherwise provided in this part, financial assistance 
to a Community Action Agency or other agency pursuant to 
Section 221 and 222(a) shall not exceed 80 per centum of 
approved costs of assisted programs." 

Administration 

Sec. 6. (a) Section 601(c) of the Economic 
Opportunity Act of 1964, as amended, is cimended to read: 
"The Administration shall be an independent agency. The 
Director shall have the responsibility for carrying out 
Titles I, II, III-B, VI, VII and IX of this Act.". 
The remainder of this Subsection is stricken. 

(b) Section 602(d) of the Economic Opportunity 
Act of 1964, as amended, is amended by striking out, 

the words "with the approval of the President,". 

(c) (1) The first sentence of section 605(c) 
of the Economic Opportunity Act of 1964, as cimended, is 
amended by inserting "and ending with the calendar year 
1978" before the period at the end thereof. 

(2) A new sentence is added at the end of the 
second sentence: "The Advisory Council shall cease to exist 
60 days after mciking the final annual report required by thii 
subsection. " 

(d) Section 620 of the Economic Opportunity 

Act of 1964 as amended is amended by striking "The Director 
and such other agency head's shall submit at least annually 
to the Congress a joint or combined report describing the 
actions taken and the progress made under this section." 



203 



Conununity Economic Development 

Sec. 7. (a) Section 714 (2) of the Economic 
Opportunity Act of 1964, as amended, is amended to read: 
"be made available to the grantee, in accordance with 
current Department of the Treasury regulations and other 
conditions which the Director deems appropriate, within 
thirty days following approval of the grant agreement by 
the Director and such grantee of the grant agreement." 

(b) Section 731(a) of the Economic Opportunity 
Act of 19 64, as amended, is amended in the first sentence 
after the words "under this title" by inserting "and to 
Community Action Agencies and other community-based organi- 
zations eligible for financial assistance under Title II of 
this Act," 

Repealer 

Sec. 8. The following provisions of the Economic 
Opportunity Act of 1964, as amended, are repealed,: 

(1) Section 210(f) 

(2) Section 222(a) (10) 

(3) Section 226 

(4) Section 228 

(5) Section 236 

(6) Section 240 

(7) Section 601(e) (f) (g) (h) 

(8) Section 745 

Effective "Date 

Sec. 9. This Act shall become effective upon 
enactment. 



25-371 O - 78 - 15 



204 



Sec. 3 (a) (b) (c) (d) 



The new language would extend the authorization for 
programs under the Economic Opport\inity Act in Titles 
I, II, III-B, VI, VII and DC for a period of three years. 
The recent history of this agency has been characterized 
by ah atmosphere of uncertainty regarding the future of the 
Community Serinces Administration which has made long- 
range planning virtually impossible. If the agency is 
forced to exist frorh year to year with no guarantee of 
continuity, the important business of renewed commitment 
to the poor and their problems, with an emphasis on 
future planning and development, is lost. 

Rational management practices argue for a period of three 
years, which will allow not only initial reorganization but 
time in which to implement it. Three years will also allow 
implementation and evaluation of new program direction 
and Initiatives. ' 

Three years would provide the President and the Congress 
ample opportunity to evaluate a viable CSA role in any 
government-wide reorganization. 

It is for these reasons, and in the spirit of Congress' 
desire to reevaluate, and have rejustified, programs 
conducted by the Federal governnaent that we recommend 
a three year reauthorization for CSA. 



Current Language 

"Section 237, There is also authorized to be 
appropriated not to exceed $50, 000 to 
carry out section 235-during fiscal year 
1975, and such sums as may be necessary 
during each of the two succeeding fiscal 
years, except that in no event may more 
than 12 1/2 per centum of such additional 
am.ounts be used in any one State. " 



205 



Proposed Change 

"Section 237. There Ls also authorized to be 
appropriated not to exceed $50, 000 to carry 
out section 235 during fiscal year 1975, and 
such sums as may be necessary during each 
of the six succeeding fiscal years, except 
that Ln no event may more than 12 1/2 per 
centum of such additional amounts be used 

L in any one State. " 

I-. * * * 

Current Language 

"Sec. 245. The Director shall carry out the 
programs provided for Ln this title during 
the fiscal year ending June 30, 1967, and 
the eleven succeeding fiscal years. For each 
such fiscal year only such sums may be 
appropriated as the Congress may authorize 
by law." 

Proposed Change' 

"Sec. 245. The Director shall carry out the 
programs provided for in this title during the 
fiscal year ending June 30, 1967, and the 
fourteen succeeding fiscal years . For each 
such fiscal year only such sums may be 
appropriated as the Congress may authorize 
by law. " 

* « * 

Current Language 

"Sec. 321. The Director shall carry out the 
program.s provided for in this title during 
the fiscal year ending June 30, 1967, and the 
eleven succeeding fiscal years. For each 
such fiscal year only such sums may be 
appropriated as the Congress may authorize 
by law. " 

Proposed Change 

"Sec. 321. The Director shall carry out the 
programs provided for in this title during the 
fiscal year ending June 30, 1967, and the 
fourteen sticceeding fiscal years . For each such 
fiscal year only such sums may be appropriated 
as the Congress may authorize by law." 



206 



Current Language 

"Sec. 615. The Director shall carry out the 
programs provided for in this title during 
the fiscal year ending June 30, 1967, and the 
eleven succeeding fiscal years. For each 
such fiscal year only such sums may be 
appropriated as the Congress may authorize 
by law. " 

Proposed Change 

"See. 615. The Director shall carry out the 
programs provided for m this title during 
the fiscal year ending June 30, 1967, and the 
fourteen succeeding fiscal years . For each 
such year only such sums may be appropriated 
as the Congress may authorize by law." 



207 



Sec. 3.(e) 

Current Language 

"Sec. 703. For the purpose of carrying out this title, 
there are authorized to be appropriated $39,000,000 
and such additional sums as may be necessary for fiscal 
year 1975, and such simis as may be necessary for each 
of .the two succeeding fiscal years." 

Proposed Change 

"Sec. 703. For' the purpose of carrying out this title there 
are authorized to be appropriated $39,000,000 and such 
additional sums as may be necessary for each of the six 
succeeding fiscal years, to remain available until expended. " 

Title VII grantees are presently funded on a two-year basis: 
In order to provide the Agency sufficient flexibility in pro- 
gram redirection, "no-year" funding authority is needed. "No 
year" authority will permit the Agency to fxmd Title VII grantees 
on evaluable past performance basis. The change recognizes 
the developmental nature of Title VII programs and is authority 
similar to that existing for the Economic Development Admin- 
istration, Department of Commerce. The Agency has previously 
resorted to devices of forward funding in order to avoid return 
to Treasury of lonobligated program funds. These practices 
have invited abuse and precluded the funding of Title VII 
grantees on a performance basis. 



208 



Sec. 4 



Current Language 

"Heads tart. Economic Opportunity, and Community Partnership 
Act of 1974 
"Sec. 15. 

"(a)(1) For the purpose of carrying out title I, title II, 
title III, title IV, title V, title VI, title VII, title VII, 
and title IX of the Economic Opportunity Act of 1964, there 
are authorized to be appropriated such sums as may be 
necessary for each of the fiscal years 1975 through 1977. ■ 

"(2) For the purpose of carrying out the programs 
authorized under section 221 there is authorized to be 
appropriated $330,000,000 for the fiscal year 1975 and 
such sums as may be'necessary for each of 'the t^*o succeeding 
fiscal years. 

"(b) Unless the Congress has passed or formally rejected 
legislation extending the authorizations or appropriations 
for carrying out any title of the Economic Opportunity Act 
of 1964 specified in subsection (a) of this section, or 
adopts a concurrent resolution providing that the pro- 
visions of this subsection shall not apply, the authori- 
zations of appropriations specified in subsection (a) are 
hereby automatically extended for one additional fiscal 
year beyond the terminal year specified in the Economic 
Opportunity Act of 1964 or in this section." 



Proposed Change 

"For purposes of carrying out Titles I, II, III-B, VI, 
VII, and IX of the Economic Opportunity Act of 1964, as 
amended, there are authorized to be appropriated such sums 
as may be necessary for the for the period ending September 30, 
1979 and each of the two succeeding Fiscal years". 

No authorizing levels for appropriations under this Act are submitted 

at this time because we feel the new Administration has not had 

sufficient opportunity to review our budgetary needs in relation to 
reorganization and program emphasis. 



209 



(Sec. 5 (a) 



(Current Language 

(b) Each board to which this subsection applies shall consist of 
not more than fifty-one members and shall be so constituted that 
(1) one-third of the members of the board are elected public 
officials, or their representatives, except that if the number of 
elected officials reasonably available and willing to serve is 
less than one- third of the membership of the board, membership 

[ on the board of appointive public officials may be counted in 

meeting such one- third requirement, (2) at least one- third of the 
members are persons chosen in accordance with democratic selection 
procedures adequate to assure that they are representative of the 
poor in the area served, and (3) the remainder of the members are 
officials or meabers of business, indus;:ry, labor, religious, 
welfare, education, or other major groups and interests in the 
community. Each member of the board selected to represent a 
specific geographic area within a community must reside in the 
area he represents. No person selected under clause (2) or (3) 
of this sub-section as a member of a board shall serve on such a 
board for more than five consecutive years, or more than a total 
of ten years. 

Proposed Change * 

Section 211 of the- Economic Opportunity Act of 1964, as amended, 
is amended in subsection (b) thereof to read: "Each board to 
which this sub-section applies shall consist of not more than 
fifty-one and not less than fifteen members and shall be so 
constituted that (1) one-third of the members of the board are 
current elected officials reasonably available and willing to 
serve is less than one-third of the membership of the board, 
membership on the board of appointive public officials may be 
counted in meeting such one-third requirement, (2) at least 
one-third of the members are persons chosen in accordance with 
democratic selection procedures adequate to assure that they 
are representative of the poor in .the area served, and (3) the 
remainder of the members are officials or members of business, 
industry, labor, religious, welfare, education, and other major 
groups and interests in the community. Each member of the board 
selected to represent a specific geographic area within a 
community must reside in the area he represents. No person 
selected under clause (2) or (3) of this subsection as a member 
of a board shall serve on such a board for more than three 
consecutive years, or more than a total of seven years". 

The change in Section 211(b) of the EOA v/hich would reqiiire a minimum 
of fifteen persons on a Community Action Agency's board of directors. 
This would correct situations in which board size might be too small 
to accurately reflect the desired local participation. The present 



210 



language has allowed a small number of community action agencies to 
suggest that their board consists of only three seats. A requirement 
of at least fifteen members per board will reflect Congressional and 
agency intent for local representation in board decisions. 

The second change in Section 211 reduces the length of service for 
community representatives on a CAA board from five to three consecutive 
years and from ten to seven years total length of service. We must 
have increased participation of local communities in the decision 
making prbcess and this provision would encourage greater and more 
frequent participation of the community served and permit more individuals 
to have the experience such service provides. It would promote a more 
active, involved community of Individuals planning for their own needs 
and future. 



211 



Sec. 5. (b)(1) 



Current Language 

"Sec. 222 (a)(ll)(third sentence) In the 
construction, rehabilitation, and repair 
of housing for low- income families under 
this paragraph, the services of persons 
enrolled in Mainstream programs may 
be utilized. " 

Proposed Change' 

"Sec. 222(a)(ll) In the construction, 
rehabilitation and repair of housing for 
low-income families under this para- 
graph, the services of persons enrolled 
in Mainstream programs and programs 
under the Comprehensive Employment 
and Training Act of 1973, may be utilized." 



This would constitute a technical change and an updating 
of the Act to conform with changes that have been made 
in law since enactment of the rural housing section. It 
would permit a relationship between rural housing projects 
and CETA programs we feel is most desirable. 



212 



Sec. 5. (b)(2) 



Current Language 

"Sec. 222. (a) (13) A program to be known as "Summer Youth 
Recreation" designed to provide recreational opportunities 
for low- income children during the sucmer months. Funds 
made available for this section shall be allocated by the 
Director, after consultation with the Secretary of Labor, 
among prime sponsors and other agencies designated under 
title I of the Comprehensive Employment and Training Act 
of 1973 on the basis of (1) the relative number of public 
assistance recipients in the area served by such prime 
sponsor or agency, as compared to the Nation; (2) the 
relative number of unemployed persons in such area as 
compared with the ^Jation; and (3) Che relative r.uTiber 
of related children living with families with income 
below the poverty line in such area, as compared to the 
Nation. That part of any allotment which the Director 
determines will not be needed may be reallotted, at such 
dates during the fiscal year as the Director may fix, to 
the extent feasible, in proportion to the original 
allotments. In making allocations under this section, 
the Director shall insure, to the maximum extent 
possible, that for the program commencing in the fiscal* 
year ending June .30, 1975, and for the program in each 
succeeding fiscal year no prime sponsor or other desig- 
nated agency shall receive an amount less than the 
amount received for such programs during the fiscal year . 
ending June 30, 1973, or the fiscal year ending June 30, 
1974, whichever is higher." 



Proposed Change 

"Sec. 222. (a) (13) A program to be known as "Summer Youth 
Recreation" designed to provide recreational opportunities 
for low- income children during the summer months. Funds 
made available for this action shall be allocated by the 
Director among community action agencies where feasible, 
or other public or private non-profit agencies where no 
such community action agency exists or is able to 
administer a program to provide recreational opportunities 
for low- income children during the summer Tonths." 



The proposed change is envisioned as a means of insuring compliance 
with the legislative intent that the program serve the needs of 
disadvantaged children for summer recreation. The revision would 
modify implementation of the Summer Youth and Recreatinn Program 
in such a fashion as to provide for sponsorship by community action 
agencies and establish eligibility standards consistent with other 
Title II programs. 



213 



The designation of CETA prime sponsors as the local administering 
agency for SYRP is a consequence of the program having been lodged 
In Che Department of Labor during 1974. Rather than create a 
separate eligibility standard for SYRP, the Department used prime 
Sponsors. The resulting administrative system is somewhat cumbersome. 
Inasmuch as the sponsor's customary relationship is with the DOL system. 
SYRP is not a Manpower program and does not logically fit into the 
context of CETA, except for the use of Summer Youth Job enrollees as 
employees . 

The community action agencies are necessarily familiar with general 
CSA procedures in grant application, auditing and reporting. They 
also have other CSA general administrative funds available to permit 
early SYRP start up, with subsequent reimbursement from SYRP once 
funds SYRP received. In terms of responsiveness to local needs, 
the community action agencies have the outreach capability to 
enable quick recruiting of disadvantaged children, whch is important 
due to the tight time frame of the program. 



214 



Sec. 5.(c) 



Current Language 

•'Sec. 225. (c) Unless otherwise provided in this part, 
financial assistance extended to a community action 
agency pursuant to sections 221 and 222(a), for the 
period ending June 30, 1967, shall not exceed 80 per 
centum of the approved cost of the assisted program or 
activities with respect to fiscal year 1975, and 70 
per centum of such costs with respect to fiscal year 
1976, and shall not exceed 60 per centum of such costs 
with respect to fiscal year 1977, except that in the 
case of community action agencies receiving such 
financial assistance annually of $300,000 or less, 
such finar.cial assistance shall not exceed 7 5 per 
centum of such costs with respect to fiscal year 1976, 
and shall not exceed 70 per centum of such costs with 
respect to fiscal year 1977." 



Proposed Change 

"Sec. 225. (c) Unless otherwise provided in this part, 
financial assistance to a Community Action Agency or 
other agency pursuant to Sections 221 and 222(a) 
shall not exceed -80 per centum of approved costs of 
assisted programs ." 



One of the premises upon which GEO was founded in 1964 was that a 
national Federal program for poor people was necessary because local 
governments could not or would not do the job. One of the assumed 
difficulties was payment. Thus, like the national highway 
construction program that preceded it, the local share was set at 
ten percent. In 1967 amendments, that local share was increased to 
twenty percent where it remained for eight years until 1976. 

During those eight years, both the local share and the Federal contri- 
bution of $330 million remained stable. Over that period, increasing 
local acceptance and firm administration of the required local 
financial support brought strict compliance with the requirement -- 
in 1975 only two waivers were granted to local initiative grantees 
at the 80/20 level. 

However, the Community Services Act of 1974 required a massive increase 
in local support: in the case of larger grantees, that local support 
was required to more than double in two years. A grantee receiving 
$300,000 Federal dollars in 1975 had to produce $75,000 from his 
mayor, city council, county or state government. This year, to 
remain eligible for the same Federal dollars, the typical private, 
non-profit corporation has to ask its community for $200,000 in 
local contributions, a 2677. increase. 



215 



Since CAP's have been unable to increase local financial support 
in the amounts called for, the Agency has been forced to issue 
relatively broad criteria for waiver, as provided for in Section 
225(c). Two bases for waiver are now offered: (1) extreme 
percentage of poverty in an area, which applies to 193 councies, 
and (2) failure of all "reasonable efforts" of the CAP to raise 
non-Federal share. In .Fiscal Year 1976, of our 879 C^P's, 266 
received waivers. Notwithstanding the relief that may be provided 
local governments by an improved economy, we expect the current 
fiscal year with the higher requirements fr local match will reveal 
a similar pattern. 

^Vhen close to a third of our grantees require administrative relief 
to finance their ongoing program levels -- without any adjustment i 
for increases in cost of living — it is tinely to raise serious 
questions about the necessity and equity of the underlying require- 
ments. The successful CAP which produces the massive increase in 
non-Federal share for our local initiative program must use it to 
boy our 60 percent dollars instead of bidding on more attractive 
90percent or 80 percent dollars available from other social programs, 



25-371 O - 78 



216 



Sec. 6(a) 



Current Language 

"Sec. 601. (c) Subject to the provision of subsection 
(e) of this section, the Administration shall be an 
independent agency. The Director shall have the 
responsibility for carrying out titles I, II, III-B, 
VI, VII and IX of this Act. The functions of the 
Director with respect to earring out titles I, II 
(except section 232), III-B, VI, VII and EC of this 
Act shall not be delegated to any other officer not 
directly responsible, both with respect to program 
operation and administration, to the Director. 
Beginning after June' 15, 1975, the policymaking 
functions, including the final approval of_ grants 
and contracts, of the Director, shall not be delegated 
to any regional office or official." 

"Proposed Change 

Sec. 6. Ca) Section 601(c) of the Economic Opportunity Act of 
1964, as amended, is amended to read: "The Administration shall 
be an independent agency. The Director shall have the responsi- 
bility for carrying out Titles I, II, III-B, VI, VII and IX of 
this Act". The remainder of this Subsection is striken. 



Section 601 (c) was amended in 1974 to pro'iibut the Director from 
delegating to regional officials the authority to make grants or 
contracts or to set policy. While this was intended to force 
greater review of and control over grants and contracts, it has 
had the opposite effect. The requirement that final approval 
over grants and contracts reside in Headquarters office, effective 
June 1975, has to date necessitated over 8,000 grant reviews and 
signatures be made by the Headquarters official to whom such 
authority was delegated. 

Thus, final review and approval has become perfunctory rather than 
substantive and the grant making process has become even more 
unwieldy, with greatly increased paperwork, cross-country mailings, 
and resultant funding delays. The requirement has kept the Head- 
quarters official from the substantive task of monitoring regional 
performance and the necessary reliance on the judgment of Regional 
Directors has been increased rather than diminished. 

This amendment would reduce the current paperwork overload, reduce chronic 
funding delays, and decentralize authority in a responsible, revocable 



217 



Sec. 6(b) 

Current Language • 

Section 602(d) "with the approval of the President, 
arrange with and reimburse the heads of other Federal 
agencies for the performance of any of his functions 
under this Act and, as necessary or appropriate, 
delegate any of his powers under this Act and authorize 
the redelegation thereof subject to provisions to 
assxire the maximum possible liaison between the 
Community Services Administration and such other 
agencies at all operating levels, whi'ch shall include 
the furnishing of complete operational information 
by such other agencies to the Community Services 
Administration to such other agencies;" 

Proposed Change 

Section 602 (d) of the Economic Opportunity Act of 1964, as 
amended, is amended by striking out, the words "with the 
approval of the President," • 



Consistent with the change in Section 601(c), removing 
the prohibition against the Director delegating any 
authority to those not directly responsible to him/her 
under the Act, this language would allow delegation of 
specified authority outside the Agency to facilitate 
interagency cooperative efforts without requiring 
specific Presidential approval. 

We feel this is desirable as the Agency increases its 
interaction with other departments and agencies to 
minimize delays in implementing joint efforts. 



218 



Sec. 6 (c) 

Current Language 



(c^ The \dvi3ory Council shall make an annual report of its find- 
ings and recommendations to the President not later than March 31 
• of each calendar year beginning with the calendar year 196k The 
President shall transmit each sSch report to the Congress together 
trith his comments and recommendations. 



Proposed Change 

(c) CD The first sentence of section 605(c) of the Economic 
Opportunity Act of 1964, as amended, is amended by inserting 
"and ending with the calendar year 1978" before the period at 
the end thereof. (2) A new sentence is added at the end of the 
second sentence: "The Advisory Council shall cease to exist 
60 days after making the final annual report required by this 
subsection". 

This change would abolish the National Advisory Council sixty 
days after the submission of its March 1978 report to the 
President. We support this provision with the understanding 
that if the Council can prove that it is an effective and 
necessary partner in our efforts to alleviate poverty and its 
causes during this period, that we will urge its continuance. 



219 



Sec. 6 (d) 
Current Language 



I 



PRIVATE ENTERPRISE PARTICIPATION' 

Sec. €20. The Director and the heads of any Federal departments 
or agencies to which the conduct of programs described in this Act 

have been delegated shall take such steps as may D« desirable and ap- 
propriate to insure that the resources of private enterprise are em- 
ployed to the maximum feasible extent in the programs described in 
this Act. The Director and such other agency heads shall submit at 
least annually to the Congress a joint or combined report describing 
the actions taken and the progress made under this section. 



Proposed Change 

(d) Section 620 of the Economic Opportunity Act of 1964 as 
amended is amended by striking "The Director and such othpr 
agency heads shall submit at least annually to the Congress 
a joint or combined report describing the actions taken and 
the progress made under this section". 

This change would eliminate one of three reports required annually 
under the Act. We would also eliminate the Section 745 report; 
however, the Agency would still be required to file its annual 
report to Congress under Section 608. The information required 
in this section and Section 745 would be included in that annual 
report . 



/ 



220 



Sec. 7 (a) 

Current Language 

"Sec. 714 (2) Federal assistance to any program 
carried out pursuant to this part, including 
grants used by community development corpora- 
tions for capital improvements shall (1) , . . , 
and (2) be made available for deposit to the 
order of the grantee, under conditions which the 
Director deems appropriate, within thirty days 
following approval of the grant agreement by the 
Director and such grantee of. the grant agreement. 

Proposed Change 

"Sec. 714 (2) be made available to the grantee; 
in accordance with current Department of the 
Treasury regulations and other conditions which 
the Director deems appropriate, within thirty 
days following approval of the grant agreement 
by the Director and such grantee of the grant 
agreement, " 



Section 714 (2) can be, and is presently being interpreted 
by Title VII grantees as authority to maintain balances of 
Federal cash in excess of the 30-day needs specified as 
maximal by Treasury Circular No. 1075 and CSA Instruction 
6800-10. This proposed language change seeks to clarify 
the precedence of Treasury and Agency regiilations specific 
to letter-of-credit method. Legislative resolution of this 
long-standing problem is more timely and less costly than 
alternative means such as a court test. The proposed change 
is consistent with Agency efforts to install adequate funds 
control over Title VII grantees. 



221 



Sec. 7. (b) 



Current Language 

"Sec. 731. (a) The Director is authorized to make or 
guarantee loans (either directly or in cooperation with 
banks or other organizations through agreements to 
participate on an immediate or deferred basis) to 
cdrammity development corporations, and families and 
local cooperatives eligible for financial assistance 
under this title for business, housing, and -community 
development projects which the Director determines will 
carry out the purpose of this part." 

Proposed Change 

"Sec. 731. (a) The Director is authorized to make or 
guarantee loans (either directly or in cooperation 
with banks or other organizations through agreements 
to participate on an immediate or deferred basis) to 
commijnity development corporations, and families and 
local cooperatives, eligible for financial assistance 
under this title, and to Commimity Action Agencies and 
other community-based organizations eligiblie for 
fi-nancial assistance under Title II of this Act, for 
business, housing and community development projects 
which the Director determines will carry out the purpose 
of this part." 



This proposed change establishes the eligiblity of Community 
Action Agencies and other community-based organizations consis- 
tent with their eligibility for financial assistance under 
other sections of Title VII. 



222 



Sec. 8(1) 



Current Language 

"Sec. 210 (f) In carrying out his responsibilities 
under this part the Director may delegate such 
functions (other than policymaking functions and 

. , the final approval of grants and contracts) to a 

State, in accordance with criteria and guidelines 
established by him, as he deems appropriate, 
except fhat no such delegation shall take place 
unless all the community action agencies within 
such State formally indicate their approval of 
such proposed delegation, except that whenever such 
delegated functions include the authority to approve 
programs within such State the Director shall 
make available to the State, in addition to an 
amount not less than the amount made available 
to such State for State agency assistance under 
section 231 in the previous fiscal year, an an;ount 
in each fiscal year equal to such State's share 
(as determined by the formula set forth in the 
third sentence of section 225 (a) of the aggregate 
amount made available during the fiscal year 
ending June 30, 1974, for the operation of 
regional offices of the Office of Economic Op- 
portunity. " 

Proposed Language 

This section would be repealed. 



Although this section has never been utilized by a State, it 
bears the potential for creating massive inefficiency and 
disorganization within the agency. 

CSA's nationwide and regional structures are an integral 
part of its effort to comply with the intent of Congress, and 
the legitimacy of this structure should not be dependent 
upon the omnipresent possibility of several states' with- 
drawing from the system. 

In addition, under the proposed change of Section 601 (c) 
of the Act, such disruptive State withdrawals could create 
fifty separate grant-approving operations. 



223 



Sec. 8 (2) (3) (4) 



The repeal of these sections would affect undeveloped 
authority for environmental action, architectural design 
and consumer action programs. The authority for such 
eligible activities will continue to exist in other sections 
of the Act. 



Current language 

Section 222(a) (10) 

(10) An "Environmental Action" program through which low- 
income persons •^11 be paid for work (which would not otherwise 
be performed) on projects designed to combat poHution or to im- 
prove the environment. Projects may include, without limitation: 
cleanup and sanitation activities, including solid waste removal ; 
reclamation and rehabilitation of eroded or ecologically damaged 
areas, including areas affected by strip mining; conservation and 
beautification activities, including tree planting and recreation 
area development; the restoration and maintenance of the en- 
vironment ; and the improvement of the quality of life in urban 
and rural areas. . 



Proposed Change 
Repeal 



224 



Current Language 
Sec. 226 



DBSION AND PI^ANXIXO ASSISTAXCE PROGRAMS 

Sec. 226. (a) Tlie Director shall make grants or enter into contracts 
to provide financial assistance for the operating expenses of programs 
conducted by community-based design and planning organizations to 
provide technical assistance and professional architectural and related 
serr\-ices relating to housing, neighborhood facilities, transportation 
and other aspects of community planning and development to persons 
and community organizations or groups not otherwise able to afford 
s\\ch assistance. 'Such programs shall be conducted with maximum use 
of the "oUmtary services of professional and community personnel. In 
provitling assistance under this section, the Director shall afford 
priority to persons in urban or rural poverty areas with substandard 
housing, substandard public service facilities, and generally blighted 
conditions. Design and planning services to be provided by such 
organizations shall include — 

(1) comprehensive community or area planning and 
development ; 

(2) specific projects for the priority planning and develop- 
ment needs of the community ; and 

(3) educational programs directed to local residents empha- 
sizmg their role in the planning and development process in the 
community. 

(b) No assistance may be provided under this section unless such 
design and planning organization — 

(1) is a nonprofit organization located in the neighborhood or 
area to be served with a majority of the governing Dody of such 
organization comprised of residents of that neighborhood or area ; 

(2) has a primary function the goal of bringing about, through 
the involvement of the appropriate community action agency or 
otherwise, maximum possible participation of local residents, 
especially low-income residents, m the planning and decisionmak- 
ing regarding the development of their community ; and 

(3) will carry out its design and planning services principally 
through the voluntary participation of professional and commu- 
nity personnel (including, where available, VISTA volunteers). 

(c)- Design and planning organizations receiving assistance under 
tliis section shall not subcontract with any profitmaking organization 
or pay fees for architectural or other professional sendees. 

(d) The Director is authorized to make whatever arrangements are 
necessary to continue pilot or demonstration projects of demonstrated 
etfectiveness of the type described in this section receiving assistance 
under section 232 of this Act during the fiscal vear ending June 30, 
19T1. 



Proposed Change 
R.ep,eal 



225 



Cvirrent Language 
Sec. 228 



CONSUJtZR ACTIO' AXT) COOPERATI^"E PROGRAMS 



Sec. 228. (a,) The Director shall make grants or enter into contracts 
to provide financial assistance for the development, technical assist- 
ance to and conduct of consumer action and advocacy and cooperative 
pro;?rams, credit resources development programs, and consumer pro- 
tection and education programs designed to demonstrate various tech- 
niques and models and to carry out projects to assist and provide 
technical assistance to low-income persons to try to improve the qual- 
ity, improve the delivery, and lower the price of goods and services, to 
obtain, without undue delay or burden, financial credit at reasonable 
cost, and to develop means of enforcing consumer rights, developing 
consumer grievance procedures and presenting consumer grievances, 
submitting consumer views and concerns for protection against unfair, 
deceptive, or discriminatory trade and commercial practices and edu- 
cating low-income persons with respect to such rights, procedures, 
grievances, views and concerns. 

(b) No assistance may be provided under this section unless the 
grantee or contracting organization or agencv is a nonprofit orsraniza- 
tion and has as a primary function the goal of brinsring about, through 
the involvement of the appropriate community action agency or other- 
wise, maximum possible participation of low-income persons in the 
project, 

(c) The Director is authorized to make whatever arrangements Are 
necessary to coi}tinue pilot or demonstration projects of demonstrated 
effectiveness, or which have not yet been evaluated until such time as an 
evaluation is conducted and the effectiveness determined and to carry 
out evaluations of such projects, of the type described m this section 
receivin<T assistance under section 232 of this A.ct during the fiscal year 
ending June 30, 19T1 or June 30. 1 <)72. 



Proposed Change 
Repeal 



226 



Sec. 8 (5) 



Current Language 

Sec. 236. (a) There shall be established within the Community 
Services Administration an Intergovernmental Advisory Council on 
Community Services (referred to in this section as the "Council") . 

(b) The Council shall be composed of nine members who shall be 
appointed by the President as follows: 

(i) Three membeirs shall be appointed from among representatives 
of States and county and municipal govemnents or organizations 
which represent such governmental units, selected on an 
equitable political and geographic basis after considering 
recommendations made by the National Governors* Conference, 
the National League of Cities-United States Conference of 
Mayors, the National Association of Counties and similar 
organizations representative of State and local government. 

(ii) Three members shall .be appointed from among representatives 
of community action agencies and other grantees under This Act 
or organizations which represent such agencies and grantees, 
selected on an equitable political and geographic basis after 
considering recommendations previously made by the Director 
of the Community Services Administration. 

(iii) Three members shall be appointed from anong representatives 
of labor, management, and other sectors which have demonstrated 
active interest in community action and anti-poverty programs. 

(c) The Council shall - 

(1) encourage the formation of community partnership 
agreements ; 

(2) review the substance of such agreements and any 
regulations, guidelines, or other program criteria with 
respect thereto and advise the Director thereon prior to 
final approval thereof; 

(3) evaluate the effectiveness of such agreements in 
meeting the purposes of this Act; 

(4) conduct a continuing survey throughout the Nation on 
the extent to which, and terms under which, public and 
private resources have been and may be available for 
anti-poverty efforts; 



227 



(5) identify and encourage means of increasing resources 
available for such activities; and 

(6) submit annual reports to the President and to the 
Congress on or before March 1, 1976, and March 1, 1977, 
with respect to its activities and findings, together 
with such recommendations for legislation as it nay 
deem appropriate. 

(d) The Director shall provide the Council with such information 
as shall be necessary for the Council to discharge its functions 
r under this section and shall furnish the Council with copies of 
I all grant applications within ten days of receipt thereof. 

Proposed Change 
Repeal. 

The Intergovernmental Advisory Council has never bee established 
as required under the Act. This change recognizes that reality. 



I 



228 



Sec. R((, \ 



Current Language 

"The Director shall appoint two assistant 'di-rec tors 
for the purpose of assisting the Director in the 
administration of the provisions of this title. One 
such assistant director, to be known a« the Assistant 
Director for Connnunity Action in Rural Areas, shall 
be responsible for assuring that funds allotted for 
assistance to programs or projects designed to assist 
the rural poor are so expended. The other assistant 
director to be known as the Assistant Director for 
Community Action in Urban Areas, shall be responsible 
for assuring that funds allotted for assistance to 
programs or projects designed to assist the urban 
poor are so expended. Each assistant director shall 
have such additional responsibilities consistent 
with the foregoing responsibilities as the Director 
may hereafter assign." 



Proposed Language 
"Repeal" 



Section 240 has called for the appointment of two Assistant 
Directors for Community Action -- one for rural areas and 
one for urban. These appointments have never been made. 
Nor does the agency's new leadership intend to utilize these 
specific positions. 

However, their primary functions, to assure that funds 
equitably allotted for programs to assist the poor in rural 
areas and those to assist the poor in urban areas are so 
expended, has been carried out by the Director under the 
requirements of Section 617, Distribution of Benefits Between 
Rural and Urban Areas . 



229 

Sec. 8 (7) 

Current Language: 



(e) (1) After March 15, 1975, the President may submit to the Con- 
fess a reorganization plan which, subject to the provisions of para- 
graph (2) of this subsection, shall take effect if such reorganization 
plan is not disapproved by enactment of a joint resolution which shall 
be considered in Congress in accordance with the provisions of para- 
graph (3) of this subsection and the procedures established with 
respect to reorganization plans b^ chapter 9 of title o, United States 
Code, except to the extent otherwise provided in this Act. 

(2) A reorganization plan submitted in accordance with the provi- 
sions of paragraph (1) shall provide — 

(A) for establishing in the Department of Health, Education, 
and Welfare a Community Services Administration — 

(i) which shall be headed by a Director, 

(ii) which shall be the principal agency, and the Director 
of which shall be the principal officer, for carrying out titles 
I, n, m-B, yi, and IX of this Act, and which, with respect 
to such provisions, shall be the successor authority to the 
Community Services Administration established by subsec- 
tion (a) of this section, 

(iii) the Director of which shall be, in the performance 
of his functions, directly responsible to the Secretary, and 

(iv) in which no policymaking functions, including the 
final approval of grants or contracts, of the Director shall be 
delegated to any regional office or official. 

(B) for establishing in the Department of Commerce a Com- 
munity Economic Development Administration — 

(i) which shall be headed by a Director, 

(ii) which shall be the principal agency, and the Director 
of which shall be the principal officer, for carrying out title 
VII of this Act, and which, with respect to such provisions, 
shall be the successor authority to the Community Services 
Administration established by subsection (a) of this section, 

(iii) the Director of which shall be, in the performance 
of his functions, directly responsible to the Secretary of 
Commerce, and 

(iv) in which no policymaking fxinctions, including the 
final approval of grants or contracts, of the Director shall 
be delegated to any regional office or official. 



230 



(3) For the purpose, of this subsection and chapter 9. title 5, 
United States Code, to the extent incorporated by this subsection. 
the f ollowin/r provisions apply : 

(A) The term "resolution" means a joint ro=olution the matter 
after the resolving clause of which is: "That the Consres- of the 
United States disapproves the Community Services Administra- 
tion Reorganization Plan transmitted to the Congress by the 

President on , 19 — ,." The blank spaces therein are to 

be appropriately filled. 

(B) If, prior to the passage by one House of the joint reso- 
lution of that House with respect to the reoriranization plan, such 
House receives from the otlier House a joint resolution with 
respect to the same plan, then the following procedure applies : 

(i) If no resolution of the first House with respect to 
such plan has been referred to committee, no other resolution 
with respect to the same plan may be reported or (despite 
the provisions of section 912(a) of title 5, United States 
Code) be made the subject of a motion to discharge. 

(ii) If a resolution of the first House with respect to such 
plan has been referred to committee — 

(I) the procedure with respect to that or other reso- 
lutions of such House with respect to such plan which 
have been referred to committee shall be the same as if 
no resolution from the other House with respect to such 
plan had been received ; but 

(II)" on any vote on final passage of a resolution of 
the fijret House with respect to such plan the resolution 
from the other House with respect to such plan shall be 
automatically substituted for the resolution of the first 
House. 

(4) The transfers authorized under subparagraphs (A) and (B) 
of paragraph (3) of this subsection shall be etfective 30 days after 
the last date on which such reorganization plan could be disapproved 
under this subsection. 

(f) In the event that the reorganization plan pursuant to subsection 
(e) takes effect, the Director of the Community Services Administra- 
tion and the Director of the Community Economic Development 
Administration shall each be appointed by the President, by and with 
the advice and consent of the Senate, except that the person serving 
as Director of the independent Community Services Administration 
pursuant to the advice and consent of the Senate may, if the President 
notifies the Congress accordingly, continue to serve as Director of the 
CJommunitv Services Administration with the Department of 
Health, Education, and Welfare; but. the President may in such event 
submit to the Senate a nomination for such position. 

(g) In the event that the reorganization plan pursuant to sub- 
section (e) of this section takes effect, on the effective date thereof 
the property, records, and unexpended balances of aopropriations, 
allocations, and other funds employed, used, held, available, or to be 
made available in connection with tlbe functions of the Director of the 
independent Community Services Administration, established by sub- 
section (a) of this section, shall be transferred to the Director of the 



231 



Community Services Administration, witliin the Department of 
Health, Education, and Welfare, and to the Director of the Community 
Economic Development Administration within the Department of 
Commerce, as appropriate. All grants, applications for grants, con- 
tracts, and other agreements awarded or entered into by the Director 
of the independent Community Services Administration shall contii\ue 
to be recognized so that there is no disruption of ongoing activities for 
which there is continuing authority. 

(h) (1) In the event ^at the reorgani2ation plan pursuant to sub- 
section (e) of this section takes effect, on the effective date thereof all 
Federal personnel employed by the independent Community Services 
Administration under' the authorization and appropriations for the 
Economic Opportunity Act of 1964, transferred to the Community 
Services Administration within the Department of Health, Education, 
and "Welfare or to the Community Economic Development Adminis- 
tration within the Department of Commerce shall, to the extent feasi- 
ble, be assigned to related functions and organizational units in the 
appropriate Administration, without loss of salary, rank, or other 
benefits, including the right to representation and to the existing basic 
collective-bargaining agreement. 

(2) In the event that the reorganization plan pursuant to subsec- 
tion (e) of this section takes effect, on the effective date thereof all 
official actions taken by the Director of the independent Community 
Services Administration, his designee, or any other person under the 
authority of the Economic Opportunity Act of 1964 which are in 
force on such date, and for which there is continuing authority under 
the provisions of this Act, shall continue in full force and effect until 
modified, superseded, or revoked by the Director of the Community 
Services Administration, within the Department of Health, Educa- 
tion, and Welfare, or the Director of the Community Economic De- 
velopment Administration, within the Department of Commerce, as 
appropriate. 

(3) In the event that the reorganization plan submitted pursuant 
to subsection (e) of this section takes effect, on the effective date 
.thereof all references to the independent Community Services Admin- 
istration, or to the Director of that Administration in any statute, 
reorganization plan, executive order, regulation, or other official docu- 
ment or proceeding shall, on and after such date, be deemed to refer 
to the Community Services Administration within the Department 
of Health, Education, and Welfare, or the Director of the Community 
Economic Development Administration, within the Department of 
Commerce as appropriate, or to the Director of either such Adminis- 
tration, as the case may be. 

(4) In the event that the reorganization plan submitted pursuant 
to subsection (e) of this section takes- effect, on the effective date 
thereof no suit, action, or other proceeding, and no cause of action, 
by or against the independent Community Services Administration, 
or any action by any officer thereof acting in his official capacity, shall 
abate by reason of the taking effect of such plan. 



25-371 O - 78 - 17 



232 



Proposed Change 

Repeal 

Section 601, subsections (e)(f)(g)(h) were the provisions in 
the 1974 amendments to the Act that allowed the President, 
after March 15, 1975, to transfer the Community Services 
Administration to the Department of Healtih, Education and 
Welfare. Special provision was made for transfer of Title 
VII programs to the Department of Commerce. The President 
chose not to exercise his authority under these sections and 
maintained CSA as an independent agency. In any major 
reorganization effort conducted by President Carter, we- feel 
he would wish to use his current authority for reorganization 
to submit his own plan, without the limits imposed by thhis 
legislation; so we recommend the deletion of these sections 
from the Act. 



233 

Section 8 (8) 
Current Language 



Sbc. 745. On or before six months after the enactment of this title, 
and annually thereafter, the Director shall submit to the Congress a 
detailed report setting :^orth a description of all Federal agency pro- 
gi-ams which he finds relevant to achieving the purposes of this title 
an«l the extent to which such programs have been made available to 
community development corporations receiving financial assistance 
nnder this' title including specifically the availability and effectiveness 
of programs referred to in sections 742, 743, and' 744 of this title. 
TVTiere appropriate, the report required under this subsection also 
shall contain recommendations for the more effective utilization of 
Federal agency programs for carrying out the purposes of this title. 



?ropqsed Change 
Repeal . 



This change eliminates one of the three reports required under 
the Act. Along with the elimination of the report in Section 
620, it consolidates all reports into one annual, cocq)rehenslve 
report to Congress under Section 608. 



COMMITTEE ON HUMAN RESOURCES 
rrvncM 1. ruunsc oo<t«Ai. cotwia. 

AMD cTArr Dinicim w<<tMiM>^ToM n r: »n«a 



234 

"^CrrHcb ^lafcs ^cna{c ' 

IMITTEE ON HUMAN RESOUP 
w<<tMiM>^ToM nr-. »n«a 

February 27, 1978 



The Ifonorable Joseph Califano ' . 

Secretary of Health, Education and Welfare 
200 Independence Avenue, S.W. 
Washington, D.C. 20201 

Dear Mr. Secretary: 

On Septeniber 14, 1977, I introduced S. 2090 -- the Economic Oppor- 
tunity Amendments of 1977, at the request of the Administration. As 
you Ijiow, one of the provisions of this legislation would extend the 
Follow -Through Program for one year, tlirough fiscal year 1979. 

The Senate Human Resources Subcommittee on Enployment, Poverty and 
Migratory Labor held hearings on S. 2090, at wiiich tiine Dr. Thomas K. 
Minter, Deputy Comnissioner of the Office of Education, testified 
regarding the extension of the Follow-Th rough Program. In his testi- 
mony Dr. Minter stated: 

"We (the Administration) favor an extension of Follow- 
Through authority through fiscal year 1979 so as not to inter- 
fere with the budget to be submitted in January 1978. We are 
currently reviewing all of our elementary and secondary 
education programs, including Title I of ESEA, and believe 
tJiat Follow-Through renewal should be a part of that review 
process. Consequently, we do not have specific recoraiDenda- 
tions to make on the program at this time. We expect to 
be reacty with our recomraendations by early next year." 

I asked Dr. Minter if the Subcommittee could expect to receive a 
coEplete copy of the Departuient • s legislative recomraendations regarding 
the Follow-Through Program. He replied that such information would be 
provided by the end of January. 

Thus far, the Subcommitteo has not received any indication from the 
Departinent as to what its specific legislative proposals for the Follow- 
Tliroug}! Program are for the future, other than an extension of the pro- 
gram for one year. 

After examination of the President's budget proposals for fiscal 
year 1979, I became increasingly concerned over what specific plans 
have been rrade for this program. The President's budget reveals a 
request of $35 million for Follow-Through -- a $24 million decrease 
from fiscal year 1978 funding levels. This particular budget request 



235 



appeaors to indicate a total phase-out of Follow-Through, as has been 
proposed by previous administrations. The 1979 budget states: 

"The 1979 request vdll initiate a phase-out starting 
in the 1979-80 school year by funding only those approximately 
59,020 currently enrolled students in 162 projects. In order 
to disseminate improved coiif)ensatory educational practices, 
sites determined to be successful vdll continue to be funded 
as 'lighthouses'." 

In light of the Department's position on the extension of Follow- 
Tnrough and the request for a decrease in funding for the program, the 
Subcommittee would like clarification regarding several items of con- 
cern: 

1. IVhat are the Department's specific plans for the Follow-Through 
Program? What are your specific legislative proposals, other 
than a sijiple one-year extension? IVhat is the basis and jus- 
tification for any such proposals? 

2. Are you planning a phase-out of Follow- Through? If so, please 
describe the Department's itinerary for doing so. Please 
detail how many children, who would be eligible to participate 
at the current program funding level of $59 million, would not 
be served due to the recommended $24 million decrease. Were 
the savings realized by this decrease then used to. increase 
the Administration's budget proposals for other federal edu- 
cation programs? 

3. The Department has suggested that Follow-Through be transferred 
to Title I of ESEA. Is the Department planning to make a legis- 
lative proposal to incorporate Follow-Through into ESEA? If 
so, how will the preventive approach of the Follow-Through Pro- 
gram be workable within the context of the remedial nature of 
Title I? Please supply the Subcommittee with the specifics of 
any such proposal. 

4. It has come to the attention of tlie Subcommittee that the Follow- 
Through Program and the Office of Education contracted with the 
Stanford Research Institute and the ABT Associates to evaluate 
the various educational models used in Follow-Through. IVhen 
were such contracts let? IVliat are the terms of the contracts? 
Itow much has been spent on evaluation? Were local program 
personnel and parents included in determining the design, the 
serv^ices to be measured and the assessment techniques used 

for evaluation of tlie Follow-Through Program? 



236 



Your cooperation in providing answers to the above questions would 
be greatly appreciated. The Subconmittee will conclude hearings on 
S. 2090 on Ktirch 14, 1978. A response from you by March 8, 1978 would 
be appreciated so other Subcommittee members and their staffs can be 
appraised of your response as soon as possible. 

As you know, both the Head Start Program and the Follow -Through 
Program were first established by President Lyndon Johnson through the 
Office of Economic Opportunity. As domestic advisor to the President 
you played a vital role in formulating the programs. 

The Head Start Program has been most successful and enjoys intense 
community sijpport. Contumity support for and belief in the Follow-Through 
concept seems to be equally as intense. I am, therefore, particularly 
interested in the Department's plans for the Follow-Through Program. 

Answers to the questions put forth in this letter will assist the 
Subconmittee in determining what actions are necessary concerning the 
legislative future of this program. 

Sincerely, 



GAYLORD NELSON 
Chairman, Subcommittee 
on En?)loyment, Poverty 
and Migratory Labor 

cc: Mr. Dick Warden 

GN:nih 





[EJditor's Note: As of May 1, 1978, no response had been received from the 
Department of Health, Education, and Welfare.] 



237 



QICnHcb Pieties Senate 

COMMITTEE ON HUMAN RESOURCES 
WASHINGTON. DC 20SI0 



March 22, 1978 



The Honorable Joseph Califano 

Secretary of Health, Ediication and Welfare 

The Hubert H. Hunphrey Building 

Office of the Secretary 

Roan 61 5F 

200 Independence Avenue 

Washington, D.C. 20201 

Dear Mr. Secretary: 

The Subcomnittee on Enployment, Poverty and Migratory Labor would 
like to receive the Administration's conanent on S. 1919, for use in mark- 
iq) of the reauthorization of the Head Start Program. S. 1919 would 
enable coiranunities of 1,000 persons or less to determine their own eli- 
gibility factors for the Head Start Program. The Administration's comment 
would be most useful in comnittee deliberations. 

Specifically, how many coiranunities might potentially qualify for 
an exception of this nature? What would be the C9Sts associated with the 
provisions of the bill? What intact would such an exception have on those 
coinnunities which would still be subject to the national eligibility fac- 
tors? Any additional comients would also be appreciated. 

The Subcommittee mark-iq) session is scheduled for mid-^ril. Adminis- 
tration comment must be received by April 13, 1978 in order to be considered 
by all ccsnmittee members. 

Thank you for your consideration of this request. 

Sincerely, ii 




^^f^^W^^iH^ 



mmD NELSON 

trmain. Subcommittee 
on Erployment , Poverty 
and hligratory Labor 



GNrmh 




238 



DEPARTMENT OF HEALTH. EDUCATION. AND WELFAF^E 

OFFICE OF THE SECRETARY 

WASHINGTON. O.C. MOOl 



OFFICE OF THE 
GENERAL COUNSEL 

LEGISLATION DIVISION 



4 APR 1978 



Honorable Gaylord Nelson - 
Chairman, Subcominittee on 

Einployment . Poverty and 

Migratory Labor 
Committee on Human Resources 
United States Senate 
Washington, D.C. 20510 

Dear Mr. Chairman: 

This is in response to your letter to Secretary Califano 
of March 22, 1978, asking for his comments on S. 1919. a bill 
"To amend the Headstar t-Follow Through Act to provide more 
flexible criteria for participation in Headstart programs, 
and for other purposes." 

The Department's views on the bill are already in preparation 
in response to a similar request previously received from 
the Committee on Human Resources. We have asked that 
the report include the information requested by your letter 
as well. We would be pleased to provide you with our 
letter concurrently with its presentation to the Committee. 

Sincerely yours. 



Donald Hirsch 

Assistant General Counsel 



[Editor's Note: As of May 1, 1978, no response had been received from the 
Department of Health, Education, and Welfare.] 



239 

Appendix E 



ORGANIZATIONAL DIAGRAMS OF 
THE COMCNITY SERVICES ADMINISTRATION; 
THE HEW ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES; 
AND IHE HEW AEMINISTRATION FOR NATIVE AMERICANS 



240 



>^^ 



•/T^ 



\' 



\ 



1^,^ 
5^^ 



^ j3 



Octx)ber 1. 1977 



CSA STAFF MANUAL 1105-2 





O U. o 

UJ u. o u 

o < z _, 

O ^ UJ 





li 



St. 
11" 

















.5 i 

ui o o . 
u < z J 

it- * 

O V lU 




241 



Ul 
C£ 

h 
O 

n 
O 



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U- 

O 

O 

cjr 

LiJ 

O 




* 



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O < 



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00 --I 

01 eo 
u o 






242 



CSA 



'CORE' AND 'CLUSTER' COMPONENTS OF/^REGIONAL OFFICE 

REORGANIZATION STRATEGY: Scope of Flexibility 

in Decision-making by Regional Directors 



CORE 



CLUSTER 



(Elements of RO structure which 
are basic and mandatory) 



(Arrangement of elements which 
is within scope of RD decision- 
making) 



Office of the Regional Director 

Regional Director Standard. 

Deputy Regional Director Standard. 



Regional Counsel 
Compliance Review 



Standard, 
Standard , 



Human Rights 



Separate unit or part of Regional 
Counsel unit. 



Interagency Affairs 



Separate unit; assistant to RD; 
combined with other elements, 
such as Legislative Relations 
and/or Public Affairs. 



Legislative Relations 



RD activity; separate unit; 
assistant to RD; combined with 
other elements, such as 
Interagency Affairs and/or 
Public Affairs. 



Public Affairs 



Separate unit; assistant to RD; 
combined with other elements, 
such as Legislative Relations 
and/or Interagency Affairs. 



Emphasis Programs 



Separate unit; combined with other 
elements, such as Effectiveness 
Guidance or Field Operations. 



- Information &. Referral 
Activity 

- Human Services Program 
Specialist 

- Physical Development 
Program Specialist 

- Economic Improvement 
Program Specialist 



Standard . 

Standard . 

Standard . 

Separate position; in smaller ROs. 
combined with other specialist 
positions. 



243 



CORE (cont.) 
Effectiveness Guidance 

^* - Planning Officer 



- Budget Officer 

- Program Analysis Officer 

Field Operations Division 

Administrative Management 
Division 



CLUSTER (cont.) 

Division; separate unit; positions 
as assistants to RD. 

Separate position; combined with 

other positions such as Budget 

Officer or Program Analysis 

Officer. 

Same. 

Same. 

Standard . 

Standard . 



- Financial Management 

- Grants Processing 

- Personnel 

- Property Management 

- Offices Services 



Standard. 
Standard . 
Standard. 
Standard. 
Optional . 



244 



CSA REGIONAL OFFICE STAFF BREAKDOWN 



Comparison of Existing and Proposed Staff Levels by Function . 

Existing Proposed ]J[ X 

Regional Director and immediate staff 
Regional Counsel and Human Rights 
Program Specialists and Evaluation 
Administration 
Field 

Supervisors 

CSA Field Representative 
Support 



76 


82 


+ 87. 


46 


62 


+357. 


42 


53 


+267. 


157 


126 


-207. 


35 


40 


+147. 


163 


198 


+22% 


42 


68 


+617. 



561 



637 



+147. 



This would permit lowering national grantee ^agency load per CAA Field 
Representative from the current 7-. 2 per rep to 6.1 

Comparison of Existing and Proposed Staff Levels by Regions . 



Region 



Existing Proposed _Z 



I 


Boston 


II 


New York 


III 


Philadelphia 


IV 


Atlanta 


V 


Chicago 


VI 


Dallas 


VII 


Kansas City 


VIII 


Denver 


IX 


San Francisco 


X 


Seattle 



42 


53 


+26X 


62 


62 


0% 


47 


.60 


+28Z 


86 


94 


+ 9X 


83 


94 


+131 


71 


84 


+18X 


47 


49 


+ 4X 


34 


39 


+15X 


51 


59 


+I6X 


38 


43 


+13X 



561 



637 



+147: 



245 



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lu 


CD 

LU 


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< 



IS 

UJ z ^ 

y Q z 

U_ CD ^ 
U. tjj O 

O a O 



LU 

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CO 



8 



LU 



CO 
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8 



ID 

Q- 
LU 
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< 2 

S O 

oil 

U- CD S 

u. r> O 

o s: p 





'-' UJ UJ 

Lt-UJ X p 
O (/) O > 



2 

LJJ 

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I- uJ UJ 

3 > a: 

P UJ Z5 

> O CD 



en 

2 
UJ 3 

X Z) 
O CD 








^ 




oz 




ESEARCH, 
EMONSTRATI 
EVALUATIO 




2 


(75 

> 


(i:Q<i)Q 



o g 

2 tn Z 

2 2 2 

2 5 S£> 

Q. < O 



25-371 O - 78 - K 



248 



i 

I [22 

z y Q 

5^ > i{> 

< «i Q 




m 



249 

-/^pendix F 



CHRONOLOGY OF OEO/CSA DIRECTORS 
AND THEIR TERMS OF SERVICE 



250 



OEO/CSA - Directors 
Name Term of Office 

1. R. Sargent Shriver 

2. Bertrand M. Harding * 

3. Donald Rumsfeld 

4. Frank C. Carlucci 

5. Welsey Hjornevik* 

6. Phillip V. Sanchez 

7. Howard Phillips* 

8. Alvin J. Arnett* 

II II II 

,9. Bert A. Gallegos* 
•I II II 

10. Samuel Martinez 

11. Robert C. Chase* 

12. Graciela (Grace) Olivarez 

* Acting Directors 



10/64 - 


5/68 


5/68 - 


5/69 


5/69 - 


12/70 


1/71 - 


9/71 


9/71 - 


11/71 


11/71 - 


1/73 


1/7 3 - 


6/73 


6/73 - 


9/73 


9/73 - 


7/74 


7/74 ■ 


- 12/74 


12/74 - 


- 4/76 


4/76 - 


- 1/77 


1/77 ■ 


- 4/77 


4/77 - 


- 



OM:JB: 3/8/78 



251 

j'^pendix G 



CSA STANDARDS OF EFFECTIVENESS 
AND PROGRAM PERFORMANCE INSTRUCTIONS 



252 



CSA GUIDANCE 7850-1 



WHAT ARE STANDARDS OF EFFECTIVENESS? 

The term "Standards of Effectiveness" is derived from Section 
901(b) of the Economic Opportunity Act of 1964 as amended which 
reads, in part: 

"The Director shall develop and publish general 

standards for evaluation of program and project 

effectiveness in achieving the objectives of this 

Act. The extent to which such standards have 

been met shall be considered in deciding whether 

to renew or supplement financial assistance authorized 

under any section of the Act. ..." 

Standards of Effectiveness are management tools that enable the 
Community Services Administration (CSA) and its grantees to 
agree on common benchmarks for measuring program and /or 
project effectiveness. 

Benchmarks can be but are not always graduated quantities. In 
the case of board compliance, it is a yes or no determination. 
This, too, is a legitimate form of measurement. 

Grantees will be able to use the established benchmarks for 
internal management reporting systems and for required self- 
evaluations. CSA will use the same benchmarks to evaluate 
periodically program effectiveness from a national perspective. 
CSA also will look at the extent to which CAAs individually and 
collectively are meeting the goals they established to fulfill the 
published Standards and this review will greatly influence re- 
funding decisions. 

Standards of Effectiveness fall into the following two distinct 
categories both with legislative derivation: 

(1) General Standards which are derived from Title II, Section 201 
and 223 of the Economic Opportunity Act of 1964 as amended. 
Section 201 provides flexibility for locally designed projects 
but contains specific objectives to be achieved by these pro- 
grams and these objectives have become the first five Stand- 
ards. Section 223 mandates an additional component to be 
included in all programs funded under PART A of Title II 

and has been translated into General Standard VI. 

(2) Specific Standards which are derived from specific program 
authorities, i.e. programs in which funds provided by 
Congress must be spent for a specific purpose such as Senior 
Opportunities and Services mandated by Section 222(a)(7) of 
Title II. Appendices B through N of CSA Instruction 7850-la 
list Specific Standards which must be used to justify proposed 
projects to be assisted with those specific program funds. 



25S 



CSA ANNOUNCEMENT 



SUBJECT: Monitoring and Reporting Program Performance 
(Uniform Federal Standard) 



ISSUANCE TRANSMITTED: CSA INSTRUCTION 6 8 00-! 



SUMMARY: The attached Instruction sets forth policy and procedures 

for monitoring and reporting program performance of grantees 
as prescribed by OMB Circular A-UO and FMC 74-7. 

Filing Instructions for Issuance Transmitted: File in numerical sequence 

in standard looseleaf notebook containing other CSA Instructions 
and Notices. 



DISCUSSION 



The attached Instruction does not make major changes in the program 
progress reporting requirements previously imposed by OEO Instruction 
7031-1 which is hereby susperseded. The routine submission dates have 
been changed to require submission 30 working days after completion of 
the second and fourth quarters of the grantee's program year but flexibility 
is provided to allow administering offices the option of requiring more 
frequent reporting under certain conditions; and CSA Form 440, Project 
Progress Report, has been revised to eliminate requirements for duplicative 
and unnecessary information and will now require only that information 
previously provided by the grantee in the narrative attachment to the Report. 

Note that the PPR requirements now cover Section 231 granteyes. However, 
this Instruction does not apply to grantees funded under Title VII. A 
separate Instruction will be issued at a future date to cover Title VII grantees; 
in the meantime existing progrsun progress reporting procedures remain in 
effect. 



254 





Trp* of Ittyanci 

CSA INSTRUCTION 


6800-9 


COMMUNITY SERVICES 
ADMINISTRATION 


" Monitoring and Reporting 
Program Performance 
(Uniform Federal Standard) 


Ditt 

August 26, 1977 


WASHINGTON, D. C. 20506 


Office af primary Responii- 
kinty 

CA/P 




OEO Instruction 7031-1 


Olatributitii 

ER, 10, 15, 35-4 
45-1 



EFFECTIVE: 



AUGUST 31, 1977 



APPLICABILITY: This Instruction applies to all grants made to public 
auid private orgsuiizations /agencies under Titles II. 
and III-B of the Economic Opportunity Act of 1964, 
as amended, when such assistance is administered 
by the Community Services Administration. 

REFERENCES: (1) OMB Circular A-UO, Grants and Agreements with 
Institutions of Higher Education, Hospitals, and 
Other Nonprofit Organizations. (Attachment H) 

(2) FMC 74-7, Uniform Administrative Requirements 
for Grants-in-Aid to State and Local Governments. 
(Attachment I) 

(3) OEO Instruction 6005-1, Participation of the Poor 

in the Planning, Conduct and Evaluation of Community 
Action Programs. 



(4) 



OEO Instruction 6320-1, 
Action Agency. 



The Mission of the Community 



(5) CSA Instruction 6710-1, Change 11, Applying for a 

Grant Under Title n. Sections 221, 222(a), and 231 of 
the EOA. 



(6) OEO Instruction 7501-1, 
Opportunity Offices. 



Role of the State Economic 



1. PURPOSE 



(7) CSA Instruction 7850- la. Standards for Evaluating 
the 'Effectiveness of CSA Administered Programs and 
Projects. 



The purposes of this Instruction are to set forth the procedures for 
monitoring and reporting program performance of grantees as pre- 
scribed by references (1) and (2) above and to communicate CSA's 
specific requirements in these areas. 



(PUBLISHED IN THE FEDERAL REGISTER, AUGUST 31, 1977) 



255 



CSA INSTRUCTION 6800-9 

-2- 

2. STANDARD 

a. Mpnitoring Responsibilities (Grantee) 

Grantees shall monitor their performance iinder grants and other 
agreements and, where appropriate, ensure that time schediiles 
are being met, projected work units by time periods are being 
accomplished, and other performance goals are being achieved. 
This review shall be made for each project, function, or activity 
of each agreement as set forth in the approved application or 
award document. 

Grantees shall submit a performance report for each agreement 
that briefly presents the following information for each project, 
fxinction, or activity involved as prescribed by CSA. 

(1) A comparison of actual accomplishments with the goals 

established for the period, the findings of the investigator, 
or both. If the output of programs or projects can be 
readily quantified, such quantitative data should be related 
to cost data for computation of unit costs. 

(2) Reasons why established goals were not met. 

(3) Other pertinent information including, where appropriate, 
analysis and explanation of cost overruns of high unit costs. 

(NOTE: See CSA's implementing regulations (Attachment A to 
this Instruction) for further details. ) 

b. Submission of Performance Reports 

The Uniform Federal Standards require, except as provided in 
(1), (2), and (3) below, that grantees shall submit performance 
reF>orts to CSA covering the same reporting period as the Financial 
Status Reports. CSA will require that performance reports be sub- 
mitted to cover the same period as the financial reports but ordinarily 
with less frequency. (See Attachm^ent A for frequency of reports and 
reporting dates. ) CSA will also require a final performance report for 
grants with a fixed termination date. However, neither CSA nor any 
other Federal sponsoring agency may require reports more frequently 
than quarterly or less frequently than annually. 

CSA may waive the requirement that performance reports be 
submitted with the financial reports under the following circum- 
stances: 

(1) When the grantee is required to submit a performance 
report with a continuation or renewal application. 



256 

CSA INSTRUCTION 6800-9 
-3- 

(2) When CSA determines that on-site technical assistance 
and certified completion data will be s\ifficient to eval- 
uate construction projects. 

(3) When CSA finds it necessary to get an annual progress 
report on a calendar basis although its usual submission 
requirements are based on the grantee's program year 
or other funding period. 

c. Special Reporting Requirements (Grantee) 

Between the required performance reporting dates, events 
may occur that have significaint impact upon the project or 
program. In such instances, the grantee shall inform the 
appropriate CSA administering office by letter as soon as the 
following types of conditions become known: 

(1) Problems, delays or adverse conditions that will materially 
affect the ability to attain pxxjgram objectives, prevent the 
meeting of time schedules and goals, or preclude the attain- 
ment of project work units by established time periods. This 
disclosure shall be accompanied by a statement of the action 
taken, or contemplated, and any Federal assistance needed to 
resolve the situation. 

(2) Favorable developments or events that enable time schedules 
to be met sooner than anticipated or more work units to be 
produced than originally projected. 

If any performance review conducted by the grantee discloses the 
need for change in the budget estimates in accordance with the 
criteria established in CSA Instruction 6800-11, the grantee shall 
submit a request for budget revision. 

d. On- Site Review (CSA) 
CSA will make site visits as frequently as practicable to: 

(1) Review program accomplishments and management control 
systems; and 

(2) Provide such technical assistance as may be needed. 

TciELA (Grace) OLIVAREZ 
DIRECTOR 
ATTACHMENTS 

A -CSA Implementing Policies 

and Procedures 
P -Sample CSA Form 440 




257 



CSA INSTRUCTION 6800- 
ATTACHMENT A 



CSA IMPLEMENTING POLICIES AND PROCEDURES 

1. Policy 

CSA would like to see its grantees established as independent, self- 
reliant and viable institutions within their communities. At the 
same time it recognizes a need for strengthening the accountability 
of grantees both to their communities and to CSA as the funding 
agency. 

CSA believes that regular internal self-assessments of pro- 
ject progress conducted by or under the direction of the grantee 
board or governing officials are essential to the effective operation of 
community- based anti-poverty programming and requires that grantees 
report the results of such self-assessments to the appropriate CSA 
Administering Office. (See item 3 of this Attachment. ) 

2. What is a Project Progress Review ? 

A Project Progress Review (PPR) is the last link in closing the 
circle which includes planning, grant application, and implementation. 
A Project Progress Review requires that a grantee look both to the 
past and to the future --to the past to the conditions which existed 
before applying for CSA fvinds, what the board said it was going to 
do in the application for funds in order to deal with those conditions, 
and what has been done; and to the future to determine how the infor- 
mation gathered in the Review and the conclusions reached can be 
used to revise the goals for the remainder of the Program Year if 
necessary and /or affect the work program for the coming Program 
Year(s). 

a. Definition 

A Project Progress Review (PPR) is a process carried out by a 
grantee in order to determine: 

(1) what has been accomplished in meeting the locally set 
goals as shown in the grantee's work program; 

(2) the extent to which the grantee is achieving the broad 
purposes of community action as set forth in the Economic 
Opportunity Act and, for CAAs, the "Mission of the Community 
Action Agency"; 

(3) the extent to which the grantee is meeting the general 
and specific standards of effectiveness described in CSA 
Instruction 7850- la; and 

(4) how efficiently grantee planning, project management 
and overall administration is carried out in addressing 
the problems of poverty. 



258 



CSA INSTRUCTION 6800-9 
ATTACHMENT A 



b. What a PPR System Should Contain 

The grantee Board of Directors or Governing Officials 
should assure that the grsintee has developed a project 
review system that contains, at a minimum, the following: 

(1) a clear statement of the roles of all participants in 

the Review process, i.e. the Board itself (or governing 
officials, where appropriate), the executive director, 
other grantee staff, policy advisory committee(s), target 
area residents, and the community- at-large; 

(2) the assignment of responsibilities and allocation of 
resources for designing the Review, gathering the 
information and analyzing it, developing the final 
report(s), and deciding how the findings will be used 
in making decisions: 

(3) an adequate system for routinely collecting data which 
can be useful in the Reviews; 

(4) a description of how the findings and recommendations 
from the reviews will be used in msdcing or planning 
changes to on- going or future projects auid to improve 
the management of these projects and the agency as a 
whole; and ' 

(5) a schedule for holding regular Project Progress Reviews 
and special reviews of issues sind projects that are or 
have become a priority in the Community. 

Board members should actively participate in each Project 
Progress Review. In addition, the poor must also be involved 
in all phases including the preparation and review of the PPR 
reports. (See reference (3). ) 

3, How and When to Submit Reports 

a. Reporting Format 

Grantees will prepare reports using CSA Form 440. (See 
Attachment B . ) Each PPR report will provide an analysis 
of accomplishments in relation to each goal on the grantee's 
currently approved work program and will detail problems, 
plsinned changes and training and technical assistance needs. 
In addition, effectiveness of each goal will be assessed by re- 
lating the progress made toward achieving the goal to the 
appropriate Standard(s) of Effectiveness. 

Grantees funded vmder Section 232 may be requested by the 
Administering Office to prepare a report in narrative formi 
instead of using CSA Form 440. 



259 



CSA INSTRUCTION 6800-9 
ATTACHMENT A 



-7- 



In such cases the requirement will be included as a Special 
Condition attached to the grant. These Conditions will also 
detail the information required which will include, at a 
minimum, a comparison of actual accomplishm^ents with goals 
of the work program and an assessment of effectiveness. 

b. Frequency 

(1) Submission Dates 

Except as indicated in (2) and (3) below each grantee is 
responsible for submitting to the appropriate CSA Admin- 
istering Office a semi-annual and an annual Project Pro- 
gress Report. Reports will be submitted 30 working days 
following the end of the second and fourth quarters of the 
grantee's Program Year of Program Account 01. (If 
not funded for PA 01, grantee should use its highest funded 
Program Account as a reference point for submission of 
PPR reports. ) 

Administering Offices and grantee officials may jointly agree 
in writing to adjustments in the above reporting dates where 
this will make local progress review more meaningful and 
supportive of the mutual program direction and review ob- 
jectives of the grantee and Administering Office. Also the 
Administering Office may reduce the frequency of reporting. 
However, except when the grantee requests otherwise, the 
period covered by the PPR must always conform to that 
covered by the financial reports. 

(2) Grants With Termination Dates 

If a grant has a termination date, the grantee also is respon- 
sible for filing a final Project Progress Report within 90 
calendar days following the termination date. 

(3) Special Requirement 

There may be instances where more frequent reporting will 
be required, e.g. in the cases of developmental grants; when 
the grantee has a history of poor performance; etc. In these 
instances the fvinding office may require, as a condition of 
the grant, that Project Progress Reports be filed on a quarterly 
basis. However, in keeping with the Standards, reporting 
can not be required more frequently than quarterly unless an 
exception is obtained by CSA (Headquarters) from OMB. 



260 



CSA INSTRUCTION 6800-9 
ATTACHMENT A 



It should be noted that more frequent reporting is NOT intended 
to be imposed routinely but rather on an exception basis such 
as when the circumstances noted above exist. 

c. Number of Copies 

One copy of the report is to be sent to the appropriate CSA Adminis- 
tering Office. (Grantees receiving grants administered by both a 
Regional Office and a Headquarters Prograjn Office will send a copy 
of the PPR to each). Additionally, grantees receiving funds under 
Sections 221 and 222(a) of the Act shall send one copy to the appro- 
priate SEOO for information. 

4. AVAILABILITY OF CSA FORM 440 

Supplies of CSA Form 440 may be ordered from: 

CSA Distribution Center 
49 "L" Street. S. E. 
Washington, D. C. 20003 



261 





- 


9 - 


Pane of 


COMMUNITY S6HV1CES iOMINlSTR » TION 


fCktck appUcabi, box) 
\ ; U» Off. □ ANNUAL 
a 2n«< 0"- 
□ WQ.,. Z] FINAL 


OMB Approva! 


PROJECT PROGRESS REVIEW REPORT 


0«TE SUBMITTED 


NiME or GR.NTEE 


GRANTEE NO. 




1 1 1 ! 1 1 


ACCOUNT 


PROJECT TITLE 

Information, Referral and Follow-up 


PROJECT oo»L --To provide outreach, referral and follow-up services to 
650 low-income targfet area residents using neighborhood center staff, 
Policy Advisory Comnittees and minimum of 25 volunteers. 


S-'ANOAROISl OF EFPEC- 
TiyENESSI-.VoJ 

A-II, III, IV, V 



ACCOMPLiSMMENTS 

. ME1SJRASI.E --During this period, 30 volunteers assisted CAA in performing outreach 
home visitations. Overall, information on coomuni^ programs was given directly 
residents; 350 were referred to other organizatioi]^^ for assistance; folIo%i-up was 
ducted on 200 of these. 



NOW-QUANTIFIABLE — Thc CouiiCy Department of 



CAA to perform outreach for Title XX, 
CAA is doing preliminary eligibility 
esaing. County-wide computerized I&R s 




to 500 
con- 



Se^^* has formally requested the 
|nity ^Relopment and Food Stamp programs. 
Lng for these programs to speed up proc- 

being considered by County Commission. 




Low attendance at Policy 
four meetings. Three PAC 
equate record-keeping in 



ings. No quorum for three of last 
are vacant. Follow-ups hampered by (a) inad- 
nd (b) lack of travel funds. 



NEC CHANGES * 

Elections will 

SEOO will condu 

Recordkeeping systel 

is being revised to allocate 



month to fill vacant PAC positions. After this 
^C members on their roles and responsibilities, 
bmputerized to facilitate client "tracking." Budget 
funds to travel. 



atNG » TECHNICAL ASSISTANCE NEEOl 

Outreach supervisors need Training in planning center activities. PAC 
motivation; contact with Federal officials would help. 



ASSESSMENT OF EFFEC 



Service delivery remains generally efficient (Standard A- II ) but lack of partici- 
pation by low-income (Std A-III) causes concern. Greater involvement of volunteers 
(Stds A-IV and A-V) has improved CAA's "image" in community. 



• Do <ux complete when fi 


ling final report or in ana 


ual cepocTs for ind 


Tidual projects which w 


II not 


be re-unded. 


CERTIFICATION 


Tlie uadersigoed certifies chat this report has been completed in accordance with 
that it is true to the best of his/her knowledge, iotormatioo and belief, and that i 
reviewed and appro»ed, as indicated in Item 6, below. 


appl 
I has 


cabl« 
been 


instructions; 
approved, or ' 


t. THIS REPORT HAS SEEN CCi* 
' SOVERNINS •OARO 


■ ^lll 


ICOCO ay GRANTE 
APPROVED SV ITS 


Vot?s:riN'jVF'?.'c 


BOARD 


l"""°"^ 


S. TTPEO NAME t TITLE OF PRI 
OR PRINCIPAL OFFICER OF G 


OVERNINC BOARD 


CIAL »• SIONAT 

1 


JRE 









CSA FORM UO IRE. 



IICH IS OBSOLETE 



262 



- 10 - 

CSA INSTRUCTION 6800-9 
ATTACHMENT B 

INSTRUCTIONS FOR COMPLETING CSA FORM 440 

There should be a brief report for each project goal listed on the 
approved CSA Form(s) 419. Therefore, there should be a separate 
CSA Form 440 for each goal . (NOTE: The annual rep>ort also should give 
a separate summary for the entire program year for the project as 
a whole in addition to progress toward each goal. In this case, 
mark SUMMARY in the Project Goal box. ) 

In addressing topics 1 through 5 on the Form 440, the following 
information should be included for each goal; 

Item 

T. Accomplishments 

a. Measurable - Describe achievements in relation to 

approved goals in measurable terms; 
include unanticipated benefits to community 
or target groups, 

b. Non-quantifiable - Give brief description on no n- quantifiable 

accomplishments. 

2. Problems - Reasons for failure to reach project 

goals. 
IJ 

3. Planned Changes - Indication of planning or project manage- 

ment changes scheduled as a result of 
PPR analysis. 
1/ 

4. Training and Technical - Description of assistance needed from 
Assistance Need's" CSA or other sources. 

5. Assessment of Effec - Assessment of grantee status with respect 
tivenes s to general and /or specific standards of 

effectiveness applicable to this goal. 
Appraise effectiveness in light of costs and 
other uses of resources. 

6-10 (Certification section) Complete this section on page 1 only of 
your report. 



1/ Do not complete when filing final or annual reports for individual 

projects which will not be continued or renewed in the next Program Year. 



263 

Appendix H 



IHE HEADSTART FUNDING FORMULA 



25-371 O - 78 



264 




THE LIBRARY OF CONGRESS 

Congressional Research Service 



WASHINGTON, DC. 20540 



DISTRIBUTION OF FORMULA GRANT FUNDS UNDER THE HEADSTART PROGRAM 

This report Includes a discussion of the difference in procedure and 
impact of distribution of Headstart funds for FY 1978 as projected by the 
Administration on Children, Youth, and Families and as required by law. 
This report is a revision of the report published in the Congressional 
Record of September 27, 1977. It reflects later information gained in 
part through oversight hearings on this subject held by the Education 
and Labor Committee - Subcommittee on Equal Opportunity on September 27, . 
1977. The table included uses data sources agreed upon by CRS and ACYP 
for computation of State allotments. 



I. Current Law and Department of Health, Education, and Welfare Procedures 

The law governing the allocation of Headstart funds among the States is 
contained in sec. 513(a) of P.L. 93-644. The Headstart, Economic Opportunity, 
and Community Partnership Act of 1974. This subsection reads as follows: 



265 



CRS-2 



"ALLOTMENT OF FUNDS: LIMITATIONS ON ASSISTANCE 

"SEC. 513. (a) Of the sums appropriated pursuant to section 512 
for any fiscal year beginning after June 30, 1975, the Secretary 
shall allot not more than 2 per centum among Guam, American Samoa, 
the Trust Territory of the Pacific Islands, and the Virgin Islands, 
according to their respective needs.. In addition, the Secretary 
shall reserve not more than 20 per centum of the sums so appropriated 
for use in accordance with such criteria and procedures as he may 
prescribe. The remainder shall 'be allotted among the States, in 
accordance with the latest satisfactory available data, so that equal 
proportions ate- distributed on the basis of (1) the relative number 
of public assistance recipients in each State as compared to all 
States, and (2) the relative number of related children living with 
families with incomes below the poverty line in each State as com- 
pared to all States; but there shall be made available, for use by 
Headstart programs within each State, no less funds for any fiscal 
year than were obligated for use by Headstart programs within such 
State with respect to fiscal year 1975. Allocation" of such increases 
within each State shall, to the extent feasible, be made in such 
manner as to reflect the proportionate increases in program costs 
incurred by grantees, in accordance with regulations which the 
Secretary shall prescribe for this purpose. For the prupose of 
this subsection, the Secretary shall utilize the criteria of 
poverty used by the Bureau of Census in compiling the 1970 
decennial census." 

According to the plain meaning of the statutory language, CRS believes 

the correct procedural steps for implementing this section are as follows: 

1. Determine the amount of the appropriation to be used for the outlying 
areas, subtract and set this aside for that purpose. The law gives the Secre- 
tary the authority to determine this amount as long as it does not exceed 2 
percent of the total appropriation. 

2. Determine the amount of the appropriation to be reserved for discre- 
tionary purposes by the Secretary, and subtract this amount from the total. 
The law gives the Secretary the authority to determine this amount as long as 
it does not exceed 20 percent of the total appropriation. 



266 



CRS-3 



3. Distribute one-half of the remainder gunong the States based on the 
relative number of public assistance recipients in each State compared to all 
States. Distribute the other half of the remainder among the States based on 
the relative number of related children living with families with incomes 
below the poverty line in each State as compared to all States. 

4. If after the above step any State has less than the amount obligated 
for use by Headstart programs in, the State for FY 1975, such States are 
increased to the FY 1975 level and States with amounts over their 1975 amounts 
are proportionately reduced to provide the amount needed to raise all States 
to their 1975 amounts. 

5. Funds reserved by the Secretary (in step 2 above) may be used in 
accordance with criteria and procedures established by the Secretary. Such 
funds, or any proportion thereof, may be distributed to the States in accord- 
ance with such criteria and procedures of the Secretary. 

The above procedures, steps 1-4 have been used by the Congressional 
Research Service in the Headstart allocation tables it has prepared for this 
report. We have withheld $2,500,000 (the amount projected by ACYF) for the 
outlying areas and the Secretary's full reserve of 20 percent. None of this 
latter reserve has been distributed to the States. Therefore the amounts 
shown in the CRS tables represent what would be the minimum amount any State 
should receive under the formula in the law for the specified appropriation 
amount available for formula distribution. The minimums would be higher if 
the Secretary chose to reserve less than the amounts Indicated. 



267 



CRS-4 



According to infoirmation provided to CRS by responsible officials in 
the DHEW Office of Child Development on September 23, 1977, the Department 
had not followed the above procedures in its planned allocation of headstart 
formula funds for FY 1978. According tQ the latest data presented by ACYF, 
the amount of the .1975 obligations in States for Headstart was at least equal 
to the amount of formula funds for FY 1976 and 1977 so that the formula could 
not be used. However, since the appropriation level for the Headstart pro- 
gram has been significantly increased (from $475 to 625 million) for fiscal 
year 1978, application of the formula is required. 

In providing estimates for the Committee on Education and Labor the 
ACYF informed us that their projected method of distributing Headstart funds 
for FY 1978 were as follows: 

1. Beginning with an estimated $625 million appropriation, they set 
aside $2.5 million for the outlying areas. 

2. They subtracted 20 percent of $625 million and set this aside as the 
Secretary's reserve. 

3. From the remaining funds (to which the formula should apply) they 
then subtracted amounts to provide each State with the amount obligated in 
the State in FY 1975. 

4. The remaining formula funds ($119 million) were then distributed 
according to the formula in the law. This amount for each State was added 
to each State's FY 1975 hold-harmless amount. 



268 



CRS-5 



Further funds from the Secretary's reserve were awarded to the States in 
the following manner and added to the above amounts: 

5. Where necessary, each State was given an additional amount so that 
each State would receive 6 percent more than its FY 1977 amount. 

6. From approximately $40 million set aside for this purpose, each State 
received an amount proportionate to its prop'ortionate share of the amount 
distributed in steps 3-5, except that each State received at least enough 
for each project grantee to expand by one classroom of 15 children. 

The error in this procedure is in step 3 where the FY 1975 "hold-harm- 
less" amounts were held out from the formula grant monies. The effect of 
this error is to make the FY 1975 "hold-harmless" an additional amount to 
the formula distribution rather than part of it. Under this procedure all 
States receive amounts greater than those received in FY 1975. If the 
formula in law were utilized, all States would not necessarily receive more 
than their FY 1975 amounts. Other States would then, of course, receive less 
than due them under the formula. 

Steps 5 and 6 above allocate funds from the Secretary's reserve which 
are discretionary by law. These steps were presumably taken at least in 
part to comply with the language in the report of the Senate Committee on 
Appropriations on the FY 1978 appropriation legislation.* 



*The above observations as to the correct, legal method of distributing Head- 
start funds have been reviewed and concurred in by David M. Ackerman, Legis- 
lative Attorney in CRS, American Law Division. 



269 



CRS-6 



Impact of OCD Distribution of Headstart Funds Under the Current 
Formula for 1978 Projections 

The attached table 1 represents a comparison of the allotments which 

would be available to the States for Headstart programs under the formula in 

current law as computed by CR5 and as distributed by the Administration on 

Children, Youth and Families. A perusal of this table shows that according 

■to ACYF projections,, 16 States would actually receive less than the minimum 

amounts required by the law as computed by CRS , 



STATES RECEIVING LESS THAN MINIMUM AMOUNT 
AS REQUIRED BY THE ALLOTMENT FORMULA 



States Amount under minimum as projected by ACYF 

Arizona $ 925,688 

California 8,186,154 

Connecticut 1,109,004 

Georgia 1,315,332 

Illinois 4,254,464 

Maryland 613,718 

Massachusetts 1,001,489 

Michigan 6,855,603 

New Jersey 714,901 

New York 1,925,815 

Ohio 4,007,787 

Oregon 897,557 

Pennsylvania 4,339,808 

Rhode Island 148,968 

South Dakota 107,463 

Wisconsin 581,046 



As a result of ACYF's method of distributing funds, those States whose 
1975 hold-harmless levels were significantly higher than what would have been 
available to them if the allotment formula had been in force at that time get 
a higher amount of funds than due them under the formula. These funds are ob- 
tained by reducing the amounts to those States whose 1975 hold-harmless levels 
more closely approximated the current allotment formula. 



270 



CRS-7 



Grants made to projects in the States for Headstart programs in 1975 
were not arrived at through the use of the current allotment formula, and 
therefore, did not necessarily relate to the number of public assistance 
recipients and children in poverty. By deleting the hold-harmless amounts 
from the funds appropriated and distributing only the remaining funds accord- 
ing to the allotment formula OCD further perpetuates whatever imbalance may 
have existed in 1975 with regard to the distribution of funds in relation to 
poverty and public assistance populations in each of the States. 

In suiranary, CRS believes that DHEW's projections for FY 1978 Headstart 
allocations to the States would not be in accordance with the law because of 
incorrect treatment of the FY 1975 hold-harmless amounts. Continuation of 
this method of distribution of FY 1978 funds at the $625 million level would 
deprive 16 States of the minimum amounts they are entitled to under the 
current allotment formula which appears to be a violation of the law. 

At the aforementioned oversight hearings, the Government Accounting 
Office concurred with the opinion of the Congressional Research Service as 
to the legal interpretation of the Headstart allotment formula in the law. 



Jean Yavis Jones 
Education and Public Welfare Division 
November 14, 1977 



271 




272 



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273 



MINORITV MCMBCRS 
UACaT H. «UIX, MINN. 
lOHN M. *%IM*0(M, OHIO 
»OMM N. Cai.[Naoi<M, ILL. 



WILLIAM D. nmo, MICH 

rtw-Lip •imTOM. CALir. 

JMIPM M. CAVOOS, r*. 

I (sill) cl>t, • 



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WON* L r> MOTTWOMIO 



CONGRESS OF THE UNITED STATES 

HOUSE OF REPRESENTATIVES 

COMMITTEE ON EDUCATION AND LABOR 

21SI RAYBURN HOUSE OFFICE: BUILDING 

WASHINGTON. D.C. 20515 

November 30. 1977 



•MIMLCT pcms. c 
CAM. PVMSCLL. M 



. jcrroaos. VT. 
irr<ILt«. >. OAK. 
r. COOOLIMO, PA. 



The Honorable Joseph Califano 

Secretary of Health, Education and VJalfare 

Washington, D. C. 20201 

Dear Mr. Secretary: \ 

As you know, during our Committee's mark-up of 
legislation to extend the Economic Opportunity Act, 
serious questions arose regarding the distribution 
among the states of Headstart appropriations. As a 
result -- and understandably -- there is considerable 
xmcertainty throughout the country as to the status of 
existing Headstart programs. 

Initially, there was considerable disagreement 
over how to interpret and apply the statutory formula 
established in 1975 for the application of Headstart 
moneys . It now appears that there is agreement among 
all interested parties who have worked on this issue 
on precisely how the formula is to be interpreted and 
•applied. - • 

However, under the agreed upon interpretation of 
the formula with respect to FY 1978 appropriations, 
thirty states will receive less than they did last year 
despite the fact that appropriations for FY 1978 exceed 
the FY 1977 level by $150,000,000. None of us would 
want any state to suffer in this way. At the same time, 
we have had great difficulty in reaching agreement on 
how to resolve this matter. We recognize, however, that 
this is a critical issue and a decision must be made 
now. We have accordingly worked out an agreement which 
is not all that each of us would have preferred. It 
is a compromise however which we believe is workable. 



274 



Our agreement is as follows: 

Step One 

Of the sums appropriated for FY 1978, up to 
2% will be withheld for allocation to the Terri- 
tories. Up to 207o of the appropriation may then 
be reserved for discretionary funding. Of the 
remaining money, one-half is to be distributed on 
the relative number of children living with families 
below the poverty line in each state as compared 
to all the states; and one-half on the basis of 
the relative number of public assistance recipients 
in each state as compared to all the states -- 
except that no state is to be allocated less than 
it received in FY 1975. 

Step Two 

For those states whose FY 1978 entitlements 
in Step One are less than their actual FY 1977 allo- 
cation, funds from the Secretary's discretionary 
reserve are to be used to bring such states up to 
the level of their FY 1977 allocations. Column IV 
of the attached chart shows the proposed FY 1978 
entitlements after Steps One and Two have been 
completed. 

Step Three 

Additional discretionary moneys are to be used 
to give every state a 67o cost-of-living increase. 
With respect to those states whose FY 1978 entitle- 
ments exceed their FY 1977 allocations, an amount 
equal to 6% of the FY 1978 entitlement is to be 
added. VJith respect to all other states, an amount 
equal to 6% of the FY 1977 allocation is to be added 
to the FY 1977 level. Column VI of the attached 
chart shows the final distribution to the states 
after Steps One, Two and Three have been completed 
under our agreement. 

As is clear from the chart, a number of states wilT 
receive substantial increases in Headstart moneys. 
Accordingly, we have agreed to an amendment under which 
states will be able to carry over FY 1978 Headstart 
funds into FY 1979. Such an amendment, which will be 
added to H. R. 7577 at a later date, will provide oppor- 
tunity and time to plan for the effective utilization 
of moneys in states receiving substantial increases. 



275 



3 - 



We have also agreed to continue our work on 
developing the most equitable formula possible for the 
allocation of Heads tart moneys in fiscal years follow- 
ing FY 1978. 

Sincerely, 



ALBERT H. QUIE 




^^/^'^-y^^JJl.lu'.^ '/-/ ryL.u^ 



"7 WILLIAM F. GOODLING (J 



BALTASAR CORRADA 



Attachment. 



CDPrdb 



276 



THE LIBRARY OF CONGRESS 
CONGRESSIONAL RESEARCH SERVICE 



HEADSTART DISTRIBUTION UNDER CURRENT FORMULA AND WITHOUT 1975 HOLD-HARMLESS 

— FY '78 
Current Law Fonnula FY '78 Without Amount Required to Bring 
State (With Hold-hannless) Hold-harmleas to 1975 Hold-harmless Level 

Alabama $11,391,000 $9,50A,670 $1,886,330 

Alaska 1,511,887 511,734 1,000,153 

Arizona 4,555,930 5,024,296 

Arkansas 5,758,000 5,827,673 

California 49,127,136 54,177,587 

ColoradcJ . 5,390,660 4,044,795 1,345,865 

Connecticut ' 4,775,074 5,265,970 

Delaware 1,096^000 1,138,965 

District of Columbia 3,177,755 2,887,264 290,491 

Florida 13,747,181 15,160,442 

Georgia 12,864,375 14,186,881 

Hawaii 2,128,779 1.987,543 141,236 

Idaho 1,329,000 1,300,340 28,660 

Illinois 28,088.894 30,976,537 

Indiana ' 7,099,818 7.829,705 

Iowa 3,569,178 3,936,103 

Kansas 3,495,000 3,170,377 324,623 

Kentucky 10,807,669 9,537,591 1,270,078 

Louisiana 10,583,869 11,671,930 

Maine 2,127,560 2,346,281 

Maryland 7,016,472 7,737,792 

Massachusetts 12,256,902 13,516,956 

Michigan 21,347,170 23,541,738 

Minnesota 5,278,015 5,820,614 

Mississippi 37,082,000 9,304,990 27,777,010 

Missouri 9,656,367 10,649,077 

Montana 1,388,000 1,215,639 172,361 

Nebraska 2,157,250 2,040,087 117,163 

Nevada 752,828 830,221 

New Hampshire 1,055,620 1,164,142 

New Jersey 15,240,658 16,807,454 

New Mexico 3,045,576 3,358,673 

New York 38,777,176 42,763,613 

North Carolina 11,255,000 11,020,770 234,230 

North Dakota 683,046 753,266 

Ohio 22,748,122 25,086,713 

Oklahoma 6,634,000 5,224,207 1,409,793 

Oregon . 4,251,426 4,688,488 

Pennsylvania 22,500,940 24,814,120 

Puerto Rico 20,607,432 22,725,952 ~ 

Rhode Island 1,757,834 1,938,546 

South Carolina 6,857,000 7,034,276 

South Dakota 1,149,905 1,268,120 

Tennessee 9,476,620 8,979,832 496,788 

Texas 22,534,285 24,850,892 

Utah 1,914,509 2,111,328 — 

Vermont 1,132,875 1,102,664 30,211 

Virginia 7,178,501 7,916,477 

Washington 5,635,196 6,214,516 

West Virginia 5,275,006 3,820,110 1,454,896 

Wisconsin 7.478,502 8,247,319 

Wyoming 751.000 464.725 286.275 

FEDERAL TOTAL $497,499,998* $497,500,001* $ 38,266,163* 



*Total not exact because of rounding in computations. 



Jean Yavls Jones 
Education and Public Welfare Division 
November 11, 1977 



277 



ELIGIBLE HEAD START POPULATION 
AND NUMBER SERVED IN EACH STATE 



State 

Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

D.C. 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hanfjshire 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia 

Wisconsin 

Wyoming 

Puerto Rico 

TOTAL 



Number Served 


Number of 


Percent Served 


by End of FY 78 


Poverty Children 


by End of FY 78 


8,802 


42,310 


18.72% 


800 


1,880 


38.29 


2,778 


21,780 


11.47 


5,158 


27,920 


16.62 


23,063 


178,640 


11.61 


4,135 


12,930 


28.78 


3,942 


17,110 


20.73 


737 


3,150 


21.05 


1,665 


6,520 


22.98 


10,312 


70,100 


13.23 


8.365 


68,540 


10.98 


1,073 


5,530 


17.46 


930 


5,780 


14.48 


18,801 


98,640 


17.54 


5,435 


30,020 


16.29 


2,721 


12,410 


19.73 


2,520 


11,330 


20.01 


9,522 


36,720 


23.33 


8,339 


48,970 


15.32 


1,403 


6,930 


18.22 


4,156 


21,940 


17.04 


6,690 


41,160 


14.62 


16,700 


63,720 


23.58 


3,875 


20,640 


16.89 


29,879 


37,230 


72.29 


8,327 


34,490 


21.72 


961 


6,690 


12.92 


1,633 


9,570 


15.35 


380 


4,190 


8.16 


651 


4,840 


12.10 


7,319 


54,060 


12.18 


3,386 


16,640 


18.31 


16,044 


119,100 


12.12 


9,438 


50,910 


16.68 


435 


2,820 


13.88 


18,024 


84,940 


19.07 


6,546 


23,600 


24.96 


2,375 


14,390 


14.85 


12,730 


74,910 


15.29 


1,155 


6,350 


16.37 


5,974 


22,300 


24.11 


782 


5,360 


13.73 


8,444 


26,360 


28.83 


18,298 


131,450 


12.52 


1,364 


9,130 


13.44 


794 


4,200 


17.01 


4,380 


32,850 


12.00 


3,642 


19,130 


17.13 


3,531 


15.200 


20.90 


5,011 


25,370 


17.77 


536 


2,160 


22.33 


13,570 


144,810 
1,837,720 


8.43 



Prepared by the staff of the Subcommittee on Employment, Poverty, and Migratory Labor. 

o 



UNIVERSITY OF FLORIDA 

3 1262 09119 1170 



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